Software License Due Diligence in M&A Deals

This CLE webinar provides guidance for M&A counsel on conducting software license due diligence before closing the deal. The panel will explain key considerations when evaluating open source and other software assets and discuss best practices to mitigate the risk of acquiring software assets whose liability risks outweigh their value.

Identifying and valuing IP rights is crucial in M&A deals involving software. The complexity of software licenses, particularly with open source software, creates challenges for counsel in evaluating whether licenses should and can be transferred as part of an asset acquisition or divestiture.

Counsel to buyers want to make sure clients avoid unknowingly assuming the target’s software risks, such as reciprocal licenses or deficient code. They also want to ensure that the deal accurately reflects the true value of the target’s software. Counsel to targets want to leverage proprietary software to increase value and make the target more appealing to buyers.

Software due diligence is an important aspect of deal structure planning and key to protecting the legal interests of buyers and targets. Panel discussed key aspects of software license due diligence in asset acquisitions and divestitures, focusing on important license provisions, case studies, and deal specific issues. The panel identified best practices for risk assessment and risk mitigation.

1. Types of transactions
2. Important license provisions
3. Case studies
4. Deal specific issues
5. Assessing the risks
6. Risk mitigation strategy

The panel reviewed these and other key issues:
• What happens when the license is silent on the issue of assignability?
• What are key software due diligence success factors?
• How should counsel structure M&A deals to reduce software license compliance risks?