Open Source Software and M&A: A Guide

Open Source Software (OSS) is everywhere and it is likely that you are using it without even realising

From web browsers and established applications to comprehensive operating systems, OSS is so omnipresent in all aspects of our digital lives.

Technologists have revolutionised the use of OSS, making it a ubiquitous factor in almost every technology enabled business and therefore a vital consideration in the context of M&A/Investment transactions.

Our short video series looks to highlight the benefits and drawbacks of OSS, what common issues arise during the course of a transaction and what our top tips are for both the investor and target company during a deal.

What is open source software?

Open-source software (OSS) is a software with a source code which is designed to be publicly accessible – anyone can inspect, modify, enhance and distribute as they see fit. It is so omnipresent in all aspects of our digital lives that you are likely using it without even realising.

In this video, leading experts Callum Sinclair, Head of Technology & Commercial and Sonja Hart, Senior Associate, outline a brief history of OSS and how it has risen to prominence, particularly over the last 20 years.

The key benefits and notable drawbacks, for example around OSS license terms or issues with community development, are outlined, together with a comparison between OSS and proprietary software.

In the context of M&A and investment, why is OSS an issue?

This video explores the issues around OSS during an M&A or investment transaction.

OSS isn’t completely unrestricted and could be subject to licence conditions which vary from very basic to more restrictive.

This video highlights some of the considerations to take into account during the diligence process. For example, if OSS is identified during diligence, then the purchaser will have to drill down and explore further so that the software does not pose a risk to the target.

Key OSS licences that commonly come up in diligence include:

The MIT licence
The Apache Licence
The GNU General Public Licence (the GPL) and
The GNU Lesser General Public Licence (also known as the LGPL)

Our top tips for the purchaser and investor.

Over the last 24 months M&A in the technology sector has been buoyant. OSS is a ubiquitous factor in almost every technology enabled business and a vital consideration for technology investors.

This video provides key, practical tips for a purchaser/investor and what common issues arise during a transaction where OSS is a consideration.

Our top tips for the target company itself.

This video provides comprehensive tips on how a target company can become more acquisition and investor ready from an OSS perspective, ultimately saving time and money once a deal is identified.