Avoid legal risks that could derail your M&A deal
Unexpected legal issues during due diligence can spell disaster for software M&A deals, causing delays or even halting transactions. In this whitepaper, Holland & Knight Partner Eric Weschelblatt offers proactive steps founders and CEOs can take to protect their company’s best interest when it comes to legal matters regarding employees, technology, customers, and taxes.
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Put buyers’ minds at ease
Correctly classifying employees as exempt or nonexempt or as employees or independent contractors can help buyers feel more secure about a deal.
Protect your intellectual property
Without the right documentation, employees or independent contractors may try to claim they own your intellectual property, which can stall M&A transactions. In addition to having proprietary information and inventions agreements (PIAAs), you need to be sure you’ve used open source code properly and protect any custom-developed functionality.
Clean up customer contracts
Certain terms within your customer contracts can put you at risk, especially if your contracts are highly customized. Keeping track of contract terms now, such as consent in connection with a change of control, favored pricing provisions, and non-competes can help you avoid legal scrutiny later.
Avoid tax troubles
In M&A transactions under $50 million, 75% of companies haven’t been paying sales and use tax or haven’t considered legal changes that could impact them. If you have enough revenue or transactions in a state, you may owe sales and use tax and it’s better to know about it sooner rather than later.
Don’t wait until due diligence to start preparing
“There’s just no reason not to do the cleanup and get these things in place when you begin or two, three, four years before you begin a process. It makes the process smoother, and you don’t run into issues that are bigger than they should have been.” – SEG Managing Partner Allen Cinzori
Download your copy of this whitepaper for more best practices to make the due diligence process faster and easier.Download the 4 Best Practices