The question is easy. “Is your intellectual property properly assigned?” The founder says yes. Everyone in the room nods. The conversation moves forward. The letter of intent gets signed.
Six weeks later, in confirmatory diligence, someone actually checks. Three key contributors have no assignment agreements on file. The IP they built — the core product, the thing the acquisition is predicated on — is technically theirs, not the company’s. What follows is a $2M+ escrow holdback conversation that didn’t need to happen, at a moment when leverage has already transferred to the other side of the table.
This is not an unusual pattern. It is one of the most common findings in confirmatory diligence across software and technology acquisitions. It is also almost always knowable before the LOI.
The question is not the problem. The accountability mechanism is the problem.
Asking a founder whether their IP is assigned and accepting a verbal confirmation is not diligence. It is a conversation. The founder is not lying, necessarily. They believe the answer is yes. But belief and documentation are different things, and the difference only becomes visible when you require the documents.
The rule we apply is this: every material claim made in a pre-LOI posture session requires timestamped evidence within 24 hours. Not an explanation. Not a follow-up conversation. The signed assignment agreements, in a secure evidence repository, within 24 hours of the claim being made.
If they appear, you have confirmation. If they don’t appear, you have a finding — not a delay, not a “they’re working on it,” a finding. A finding that goes into the risk memo, gets sized for valuation impact, and informs how you structure the LOI.
Non-submission is itself information. A founder who cannot produce IP assignment agreements within 24 hours either doesn’t have them, doesn’t know where they are, or is buying time. All three of those conditions change what the next conversation should look like.
This is the difference between asking questions and requiring proof. The first produces a conversation. The second produces a posture. And posture is what the next room is actually going to test.
The 24-hour rule applies to every material domain in a pre-LOI assessment: IP assignment, disaster recovery documentation, data governance, contract execution status, key-person dependency structures. The pattern is the same. The question is standard. The evidence deadline is what separates signal from noise.
By the time confirmatory diligence starts, price is anchored. Teams are deployed. Timeline pressure is real. The room that matters for leverage is the one before the LOI, not the one after it. That is where the evidence rule has consequence.