We’ve advised enough growth companies to know this: commercial contracts are one of the most undervalued and often neglected legal elements of any growth company’s legal stack.
We've seen investment and exit deals fall over as a result of commercial contracts resembling something close to Swiss cheese (or to put it another way, their commercial contracts weren’t ‘investor-ready’). We've also seen investors and buyers seek material ‘price chips’ or delay closings due to commercial contract deficiencies that need to be remedied pre-completion.
Tight contracts not only ring-fence risk, they build confidence.
Why They Matter – for scaling companies, commercial contracts serve three essential functions:
- They define your revenue model and valuation – contracts show how you get paid, under what terms, for what duration and with what protections / certainty. Auto-renewal contracts help to underpin MRR (monthly recurring revenue) and ARR (annual recurring revenue) which is a key metric for underpinning a justifiable EV (enterprise value).
- They allocate risk – clear limitation of liability, indemnities, and warranties are essential as your customer base grows.
- They signal maturity – to investors, robust contracts demonstrate governance, scalability, and foresight.
Here are some of the key agreements every scaling company should square away as a priority:
- Master Services Agreement (MSA) – an MSA governs the ongoing relationship between your company and its customers or partners. It should be modular, scalable, and investor-friendly. At a minimum, your MSA should clearly define: the scope of services, payment terms, termination triggers, IP ownership and limitations of liability. A weak or customer-slanted MSA can become a red flag in diligence. Key takeaway – we’ve seen investment terms renegotiated – or an investor walk away altogether – because of poorly drafted legacy contracts. MSAs are not one size fits all and should be drafted to suit your specific needs. Tools like ChatGPT can be valuable allies in this process, but they must be used with caution; when it comes to legal documentation, uncritical reliance on AI can introduce risk as easily as it provides efficiency.
- Terms and Conditions (T&Cs) – if you're selling online, your T&Cs are likely the only “contract” your users agree to. Make sure they actually protect you. For SaaS or e-commerce start-ups, well-drafted T&Cs should include: user obligations, licence scope, disclaimers and exclusions, governing law, privacy and GDPR (General Data Protection Regulation). Key takeaway – weak or “borrowed” T&Cs can leave your platform legally exposed. Especially around liability, data, and IP.
- Partnership & Collaboration Agreements – many start-ups grow through strategic collaborations such as joint ventures, co-branded initiatives, or pilot programmes with large enterprises. These partnerships can look great on a pitch deck, but without a clear agreement, the risk of misalignment (or IP leakage) is high. A good partnership agreement should address: shared responsibilities and contributions, revenue or equity split (if any), duration and exit terms, confidentiality and IP ownership. Key takeaway – handshakes are not strategy. If you're building with a partner, build the legal structure too.
- Service Level Agreements (SLAs) – especially in SaaS or tech-enabled services, SLAs define the performance commitments you make to customers regarding uptime, response times, and resolution targets. A clear, well-drafted SLA not only manages customer expectations but also protects your business against vague or unrealistic demands. Key takeaway – SLA gives your customers clarity and gives you cover. Don’t leave performance obligations open to interpretation.
- Non-Disclosure Agreements (NDAs) – you shouldn’t rely on NDAs alone to protect your IP, but they do set the tone for serious commercial conversations. A fair, balanced NDA with mutual protections helps facilitate partnerships and dialogue. Key takeaway – while a well-drafted NDA may not secure the deal, a poorly drafted one can certainly delay or jeopardise it.
- Supplier or Vendor Agreements – if you rely on third parties for fulfilment, technology, or distribution, make sure those contracts are fit for purpose and dovetail with your own contracts. Poor supplier terms can compromise your own ability to deliver, and damage trust with buyers or acquirers. Key takeaway – your supply chain is only as strong as your contracts. Make sure they protect your timelines, quality, and IP.
- IP Assignment Agreements – especially in the early days, founders, freelancers, or even interns, might create valuable IP. Ensure all contributors assign their rights to the company. It’s one of the first things investors check, and one of the easiest gaps to fix, early, before valuation creeps up. Key takeaway – if the company doesn’t legally own its core IP, everything else, from funding to exit, can be compromised.
Final thought
Start-ups, scale-ups, growth companies and established companies alike move fast. But speed doesn’t need to come at any cost. Clean, scalable commercial contracts not only de-risk your operations – they add value - on your next funding round or exit.
If your contracts haven’t been reviewed with growth, diligence, or investor / acquirer expectations in mind, it might be time for a refresh.
Need help getting your commercial contracts investor or acquirer ready? Talk to us.