Mergers and acquisitions pose special challenges when software assets are involved.

    Corporations frequently acquire software intellectual property when purchasing or merging with other business entities. Such acquisitions pose special challenges when software assets are involved, including rectifying security problems, addressing licensing concerns caused by the use of open source software (“OSS”), and evaluating the maintainability and reliability of purchased software. Just as a sophisticated home-buyer will inspect a home before purchasing it, prospective corporate purchasers are well-advised to inspect the security and merchantability of source code before purchasing or bidding on software assets. Sellers are best off when they thoroughly understand the state of their own products and can anticipate potential objections. However, decision-makers often lack the ability to knowledgably inspect source code and assess it for risks, increasing the likelihood of negative outcomes.

    How Software Acquisitions Go Wrong

    In 2018, DisputeSoft was retained by a defendant in a breach of contract suit. The plaintiff, who had acquired the defendant’s proprietary software through a corporate merger, alleged that the defendant had violated a contractual provision warranting that the software would be free of any open source material that might impede its marketability. Software developers previously employed by the defendant had incorporated source code protected by the GNU General Public License into the software. As the plaintiff did not conduct a source code audit until after the acquisition, it did not discover the presence of open source until after the deal had been finalized. Similarly, had the defendant conducted a source code audit prior to the sale, the open source content could have been discovered and replaced, potentially avoiding an expensive legal dispute.

    How We Can Help

    At DisputeSoft, our experts have the tools and knowledge to help organizations perform due diligence on source code prior to acquisition. We employ automated source code review tools to examine software for standard copyright notices and open source license headers. DisputeSoft personnel are experienced in the use of static code review tools to automatically examine source code for license violations, security gaps, reliability and maintainability. To fine‑tune our results, we supplement our automated reviews with detailed, manual examinations of critical software components. We finalize our analysis by assembling comprehensive written reports summarizing our findings in a clear, user-friendly manner. Regardless of our clients’ business goals, we provide the information they need to make informed software decisions, whether contemplating a transaction, resolving a dispute, or undertaking software QA.

    Experts on Source Code Audits

    Tom Ashley

    Senior IT Litigation Consultant

    Tom Ashley applies his expertise in a wide range of software-related matters, including…

    Andrew Schulman

    Senior IT Litigation Consultant

    Andrew Schulman is an attorney, software engineer, and software litigation consulting e…

    Nick Ferrara

    Senior IT Litigation Consultant & Director of Software Development

    Nick Ferrara has been an integral part of more than 35 cases, spanning numerous commerc…

    Need a Source Code Audit?

    If you are in need of a source code audit, we invite you to contact DisputeSoft for a private consultation.