Review your formation documents before a financing, acquisition, or cofounder departure.
Pre-financing and pre-exit cleanup of Delaware C-Corp formation documents — diagnostic from $2,500, full remediation from $4,500.
For US-based founders whose Delaware C-Corp needs a review of stock issuances, IP ownership, tax elections, and corporate records before a transaction.
What a cleanup review addresses
A financing or acquisition requires a clear record of who owns the company, what stock was issued, and whether the company owns the IP it uses. Missing signatures, inconsistent capitalization records, or unresolved tax questions can require additional work during diligence.
An earlier review gives the company time to obtain documents, assess available corrections, and identify issues that cannot be cured. The diagnostic separates those issues and sets out the next steps.
What I look for
I review the items below against the company’s actual documents and transaction history. The available remedies depend on the facts, required approvals, and applicable deadlines.
| Issue | What it means |
|---|---|
| Missing or late 83(b) election | The election is generally due within 30 days after the property transfer. Ordinary late-election relief does not cure inadvertence. Without a timely election, restricted stock generally produces compensation income as it vests. |
| Founder vesting and repurchase rights | Review whether founder stock is subject to vesting and what repurchase rights apply on departure. Changes to existing arrangements require appropriate agreements and approvals; they cannot simply be imposed retroactively. |
| IP assignment gaps | Check whether founders, employees, and contractors have assigned relevant IP to the company. Missing assignments may require cooperation from the people involved. |
| Compensatory stock tax and documentation | §83 governs compensatory stock; services are not property under §351. Review valuation, vesting and any §83(b) election. Stock issued for services can qualify under §1202(c)(1)(B)(ii) if the other conditions are met. |
| Accidental S-election | Review any Form 2553 election and its effective date. Form SS-4 does not make an S election. Stock originally issued by an S corporation generally fails QSBS eligibility; a later revocation does not retroactively cure the original issuance. An S corporation cannot issue QSBS, but it may in some cases hold newly issued QSBS of a C-corporation subsidiary; see Can an S Corporation Get QSBS? The C-Corporation Subsidiary Strategy. |
| Investor financing terms and approvals | Common stock can be a valid angel investment. Check that the financing documents, approvals, capitalization and securities-law compliance match the agreed transaction; notes and SAFEs are alternatives, not requirements. |
| Cap table doesn’t tie to documents | Reconcile capitalization records with executed agreements, stock issuances, and approvals so the company can explain ownership accurately during diligence. |
| QSBS-disqualifying features at formation | Review original issuance, the gross-assets limit, qualifying business activity and actual stock repurchases within §1202’s redemption windows. Redemption rights or stock issued for services do not automatically disqualify the stock. |
| Missing organizational consents | Review actions for missing board or stockholder approvals and assess whether proper ratification or another corrective step is available. |
| Capital structure for the proposed financing | Check authorized shares, the rights of each stock class, and the option pool against the proposed financing. Charter amendments or other approvals may be needed before the financing closes. |
Two ways to engage
1. Cleanup Diagnostic — $2,500
I review your full formation file (Certificate, bylaws, stock purchase agreements, board and stockholder consents, 83(b) elections, IP assignments, EIN and tax-election filings, cap table) and deliver a written report identifying what works, what's broken, what's fixable, and what's not. Roughly 5-7 business days. You can take the report to any lawyer you choose, or come back for remediation.
2. Diagnostic + Remediation — from $4,500
The diagnostic, plus the cleanup work itself. Scope and price depend on what is found. Most engagements land in the $7,500-$15,000 range; complex situations (cofounder departures, retroactive QSBS substantiation, recapitalizations) run higher. You get a fixed-fee quote after the diagnostic, before any remediation begins.
If a term sheet is already in hand
If you have a signed term sheet and the data room opens in the next two weeks, I can assess what can be completed within that schedule. Rush pricing is by quote and reflects the compressed timeline.
A few honest caveats
- Some things cannot be cleaned up. A missed §83(b) election is the prime example. The statutory deadline is 30 days after the property transfer. Ordinary discretionary late-election relief does not cure an inadvertent missed deadline. Weekend and holiday rules and specifically applicable statutory postponements are separate, narrow timing provisions. Once the applicable deadline has passed, cleanup may be damage control rather than repair.
- People who have left the company matter. Obtaining a missing IP assignment may require cooperation from a former founder, employee, or contractor. The available approach depends on the existing agreements and the person’s willingness to sign.
- Unresolved issues need to be identified. The report will distinguish completed corrections from remaining problems, including matters that may require disclosure in diligence.
Who I am
I’m Joe Wallin. For more than 30 years, I’ve advised founders, startups, and investors, and represented companies through formations, fundraises, acquisitions, and exits. I serve on the Angel Capital Association’s Public Policy Advisory Council. I co-authored Angel Investing: Start to Finish (Holloway). I helped draft Washington State's equity crowdfunding law. I hold an LL.M. in Taxation from NYU.
Related services
- Forming a new entity instead? See Founder Formation — Delaware C-Corp formation, fixed fee $3,500.
- Need a QSBS eligibility review? See QSBS Issue-Spotting Review for an initial assessment of Section 1202 eligibility issues.
Ready to talk?
If you are preparing for a financing, acquisition, or cofounder departure, we can discuss the documents to review, your timeline, and whether a diagnostic is the right starting point.
Schedule a 20-minute cleanup call →
A note before you book: please share only the names of the parties and a brief, non-confidential description of your issue. Confidential details should wait until we’ve completed a conflicts check and signed a written engagement agreement.
Engagement subject to conflicts check and a written engagement agreement. Nothing on this page is legal or tax advice, and no remediation decision should be made based solely on the information shown here. Some items described above may not be curable in your specific circumstances. Attorney advertising.