This. And get any skeletons out as early as possible. M&A people love to use them during DD to knock down valuations. If you've already disclosed them, especially before entering exclusivity, then you have a much stronger negotiating position during the process.
I'm curious : do you have any example of what "skeletons" look like ? Apart from the obvious "we're not working as well as we say". I'd be curious to read some (anonymized) real world example.
A fun one is finding loans from friends and family that involved any sort of strings, whether convertible or interest that has accrued because Aunt Bertha forgot about the $50k she gave you.
It's easy to forget these loans from the early days, especially if there were 20 people who gave the founder little bits of money, especially if it was before he or she set up the corp accounts, etc.
Other than that, one of the worst I've knocked down uncovered a lack of assignment of IP (an early rich-media MUA) from a contractor that effectively meant the candidate company had zero value. "Who's Bob Smith of Bob Smith, Inc.? Can I talk to him about this shitty code? Oh, he owns it..."
Some commonly involve artificially boosting turnover by trying to be clever and using in-house developers as a separate concern, billing or paying through companies owned by family members. Sometimes this sort of setup is kosher (you want to smooth out and isolate capex and a friend has office space and a couple devs, or there's an overseas component, or whatever) but if money is moving between them in a semi-closed ecosystem, it's often a bad sign.
Usually, as stated, it's sloppy stuff, but sometimes you get a real weasel.
As for being a founder, having an accountant/CFO makes a huge difference. The first contract CFO I hired was a revelation. The commitment was low and the upside was huge. We were too small for a FT CFO and I was a babe in the woods and didn't even realize these people existed.
Other than that, one of the worst I've knocked down uncovered a lack of assignment of IP (an early rich-media MUA) from a contractor that effectively meant the candidate company had zero value. "Who's Bob Smith of Bob Smith, Inc.? Can I talk to him about this shitty code? Oh, he owns it..."
What happens in that case? Does the acquisition stop in its tracks, or does the company try to contact Bob Smith and buy the rights?
In the case I mentioned above, we left the candidate site immediately, arranged earlier flights, and flew back to Seattle. There may have been exec communication but I was just the technical DD guy at the time. But I never heard from them again.
Had the code been stellar, we may have given them time to sort it out so that the package was clean.
