The M&A process can be long and complex. Buying or selling a company requires meticulous planning, experienced professionals, and an appreciation of the deal dynamics involved in negotiations.
Companies that have not been involved in previous M&A transactions commonly make mistakes that result in mispricing, unfavourable terms or a failure to complete – which could have otherwise been avoided. This article describes essential technology and intellectual property related due diligence measures a buyer should undertake.
M&A: Tech & IP related due diligence.
To determine the extent and quality of the target business’s technology and IP:
- Discover what registered patents, copyrights and trademarks the business uses, controls or owns (including pending ones). Confirm that the company’s intellectual property has been appropriately legally protected and that there are no current encumbrances.
- Establish whether the company is infringing upon the IP rights of a third party. Likewise, find out if any third parties are infringing upon the business’s IP rights.
Determine if there is any litigation involved with these issues and whether the matter will be resolved before completion of the M&A transaction. - Identify how critical the use of any licensed technology is to the company’s operations. Find out the terms of the license (eg. price, length, restrictions, exclusivity). Furthermore, understand the extent to which the company has granted licenses to other businesses.
Management Advisors Pty Ltd is a highly sought after independent financial services firm and investment bank. Their team has extensive experience in initiating, sourcing and negotiating M&A transactions to completion.