13 Nov 2014 | 02:56 pm | 1 min. read
In a survey recently undertaken by international law firm Pinsent Masons into the German Tech M&A market, there are clear signs that we are in a seller's market.
The research, which seeks to establish the 'market standard' for tech M&A in the German market, shows that of the sample deals, some 40% used a 'locked box' mechanism to fix the price at an early stage of the deal – this is usually only achievable when the seller is in a very strong position. Closing accounts which ultimately determines the 'correct' purchase price at a later stage, accounted for 50% of deals. Nonetheless, in a less seller-friendly market, the distribution between these two purchase price mechanisms would be clearly skewed towards closing accounts.
Interestingly, companies undertaking M&A in the technology sector did not commonly seek out legal advisors with strong technology-sector experience. While some 75% of corporate finance advisers were appointed on the strength of their technology-sector knowledge, only 46% of lawyers appointed were sought out for their sector experience. This relative lack of technology experience among law firms appeared to manifest itself in the way transactions were undertaken. Safeguards around intellectual property, for example, typically have a disproportionate importance in technology deals. However, only 31% of deals in the survey actually had an IP-specific workstream. Yet of the technology-related risks that were identified in the same survey, some 67% of these were IP-related. It would appear then that there is a significant risk that a large number of IP risks in technology transactions may be going unidentified if so few deals are properly assessing IP as part of the due diligence.
Rainer Kreifels, Head of Pinsent Masons in Germany said: "The tech M&A market in Germany is clearly very healthy and sellers appear to be in a strong position. But our survey shows that deal-makers do need to be aware of the technology-specific risks to their deals to ensure a successful long-term legacy."
A full version of the report may be downloaded here.
Multinational law firm Pinsent Masons has been named the Most Innovative Law Firm in Europe and won the Energy & Security Transition category at this year’s FT Innovative Lawyer Awards.
Multinational law firm Pinsent Masons has been named as a top ten family friendly employer by the national charity for working parents and carers Working Families.
Multinational law firm Pinsent Masons MPillay is supporting the Asian Development Bank (ADB) on its role advising the Philippines Department of Transportation (DOTr) on the refurbishment and expansion of the Ninoy Aquino International Airport (NAIA) in Manila.
Multinational law firm Pinsent Masons has hired transactional life sciences specialist Michael Stewart as partner in its Dublin office as it expands its pan-European Technology, Science and Industry (TSI) capabilities.
Multinational law firm Pinsent Masons has hired Corporate Partner Camille Chiari who joined the firm’s Paris Office.
Multinational law firm Pinsent Masons has hired patent litigation partner James Marshall to join its London office.
For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on