Buying a software business—key considerations
Buying a software business—key considerations

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Buying a software business—key considerations
  • Purpose of the transaction
  • Due diligence
  • Shared IP
  • Warranties, indemnities and disclosure
  • Quick list—key issues when buying a software business

This Practice Note highlights the key legal and commercial issues for a buyer when looking to buy a software business. This particularly focuses on the technology and intellectual property rights (IPR) aspects, alongside some more general issues that typically arise when buying any type of business. Due diligence is considered specifically. This has been approached mainly from the buyer's perspective but also flags some concerns for the seller where relevant.

See also Practice Note: Corporate transactions for IT lawyers for further discussion of the issues relevant to the IT aspects of corporate transactions.

Data protection issues are outside the scope of this Practice Note but should also be considered as appropriate. For guidance on data protection issues that may arise in a corporate acquisition (including in connection with the IT systems), see Practice Note: The impact of the GDPR on M&A transactions and Precedents: GDPR compliant data protection due diligence enquiries—share purchase and asset purchase, and GDPR compliant data protection warranties—pro-buyer—long form—share purchase agreement and GDPR compliant data protection warranties—pro-buyer—long form—asset purchase agreement.

Purpose of the transaction

If acting for the buyer, ascertain at the outset their reasons for wanting to buy the software business. These might commonly include:

  1. being a strategic move to eliminate competition

  2. to access specific valuable intellectual property (IP), eg copyright, trade marks, patents

  3. to