Thu, 27 Sept 2018
It's clear that no company is immune to the advances in digital, new technologies and technology disruption – so what key tech trends cropping up within the M&A and corporate deals arena should you be keeping an eye on?
A major theme across the last year has been the large increase in deals involving foreign companies buying into the UK.
This could be attributable to the imminent arrival of Brexit, but it may also be due to recognition of the vast talent pool of tech expertise that we have in the UK.
Deals have often involved the retention of the previous owners and directors, even where there is no deferred consideration, suggesting recognition of the added value and skills that individuals already in the sector bring to their businesses.
We are seeing more tech companies looking at alternative ways to incentivise staff performance and retention.
Predominantly this is through shared ownership in the way of option schemes – EMI, CSOP, etc – but there is also a noticeable increase in businesses offering other perks such as flexible working hours.
These four dreaded letters have become a key part of all transactions and it would be remiss not to mention them.
Previously, buyers were keen to know what steps had been put in place to deal with the imminent arrival of GDPR and, now that it is in force, we can only expect to see even more due diligence on how data is handled.
A common issue arising is that the compliance procedures put in place are either insufficient or incorrect.
This has often been the case where the sellers have either tried to implement it themselves or have relied on a ‘GDPR consultant’ as opposed to speaking to a law firm directly.
In most tech deals there is nothing more important than how the target’s IP is owned.
This relates to logos and names but, especially in tech, to source code and patents as well.
It is important to strike a balance between providing comfort to the buyer on the unique nature of any IP and not handing over too much information before the company has been bought.
This can mean the involvement of additional parties in transactions, such as third-party specialists that can provide secure and independent reviews of IP, such as source code.
This gives the buyer reassurance that everything is as it should be, without them seeing the “secret sauce”.
R&D tax credits
Tech is at the heart of innovation, but it’s not uncommon to find clients that don’t realise that they can benefit from R&D tax credits.
If companies are making significant advances in technology which are contributing to growth, it’s really important to spot where there maybe the opportunity to take advantage of this.
If you would like any further advice on how technology might impact M&As, private equity investments and corporate deals, please do get in touch with Hayley Bevis, partner and head of corporate, via email firstname.lastname@example.org or telephone 023 9236 4321 or contact a member of the corporate team.