M&A Technology Challenges – IT Software and Vendor Contracts

Posted on: January 14, 2014 | By: Tim McGhee | Uncategorized

A merger
creates a potential risk for obtaining and using software that is not
authorized for use. Buyers generally assume they are receiving rights to seller
software assets. Acquires need to make sure that the seller owns all the assets
they are actually using. The opposite is true in a Divestiture to where the
Seller should assure that they are passing legal use to the Buyer of its
software that is currently in use.

This is where
it is important to establish two critical databases for management, tracking
and validation.  Creation of a detailed
applications landscape is important for understanding all software that is in
use by the new acquisition/divestiture. Obtaining the software licensing agreements
and clearly understanding the assignment agreements within for currently used
software is critical to assuring that you can legally continue to use the
software. Good record keeping for software license agreements is not the norm,
and becomes a very laborious task for many IT/Legal and Procurement Departments
along with all the other task associated with a divestiture or acquisition
event, so early structure and assignment is important.

Having assigned
resources to understanding the above agreements will also position you better
for upcoming negotiations with your software vendors if the assignment requires
you to relicense your software.

The topic above
merits much more dialog and is unique to M&A deals, helping and assisting
you to ward off post-close transaction and integration issues.

https://www.loganconsulting.com/M-A-Advisory

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