M&A – Due diligence

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Evaluating the process used by an interested buyer to better understand the selling business and the risks in potentially becoming an owner of that business. The reason due diligence is important to the M&A process from the buyer’s perspective is to better understand how the business, its owners and its management operate.

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With the rise in technology, intangible assets have become the most important assets for any company, thereby making intellectual property a critical factor in any investment.

With the rapid growth in technology in the last two decades, the Acquisitions (M&A) and mergers landscape has evolved drastically in recent years. Nowadays technologies assessment and intellectual property due diligence has become an important role of M&A deals. The major aspects of the IP due diligence that must be duly performed while entering an M&A deal.

Technology Transfer

Technology transfer plays a vital role in M&A deals in modern day. It is a process where research and innovation is developed into commercially exploitable techniques and products are transferred from one entity to another for some basic consideration.

We have some specific strategic goals and the approaches to M&A deals helps in strengthening your company’s position in the market. Also, data protection, privacy laws and IP protection are some of the major points to consider while entering into an M&A deal that majorly targets the acquisition of specific technology.

Valuation of Intellectual Property

The value of intellectual property more than being passively available on a register. They must be used creatively and should be used as a commercially valuable asset then more legal concepts and enforcement rights. IP valuation allows the parties to make an informed decision on the cost of capital  of the target company in financial leverage strategy to be adopted for the transaction.

Some factors which need to be considered for IP valuation must include the study of industry, entry barrier in the industry, market share ownership, economic conditions of business, profits, possibilities of business expansion & its growth, the level of competition in the market.

For the survival and growth of your company it is very much important to protect it from IP assets in M&A deals.

The products or services involved with this transaction are freedom-to-operate considerations; scope-of-protection; validity and enforceability concerns; and ownership issues.

We have divided the many goals of IP due diligence into three components for focused analysis: 

  • Prioritization of the objectives
  • The substantive investigation
  • Analysis of the results

Examining these components helps educate inhouse corporate counsel and managers on the big picture perspective needed for going beyond the issue-spotting of the IP due-diligence checklist, to derive maximum value from the IP underlying any technology driven corporate transaction while concurrently satisfying the business goals of the deal.

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