Technology Due Diligence For M&A Transactions: A Primer

Highlights

• In most merger and acquisition (M&A) transactions, the pace of the transaction, focus on the operational and financial performance of the target, and the competition created by multiple potential buyers make it a challenge to devote the time and resources necessary to perform thorough technology-related due diligence.
• Most large software licensors have instituted formalized software audit programs to identify non-compliance. In some recent examples, software audits have identified non-compliance issues that have resulted in demands for additional fees that are in the nine-figure range, which in many cases may exceed the entire value of the transaction or at least seriously impair the anticipated return on investment for an acquisition.