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News

Advice available to merging companiestest on software licensing

The Federation Against Software Theft : 05 February, 2009  (Technical Article)
The Federation Against Software Theft combines with ManageSoft to offer advice to companies undergoing merger to avoid legal problems with software licensing.
Predictions are that 2009 will see a spate of mergers, acquisitions and consolidations, not only for merits of scale, but also to improve profitability and efficiency during difficult economic times. Most recently it was announced that the UK's second biggest building society, Brittania is to merge with Co-op Financial Services and many more within the banking sector are likely to follow suit. However, how many will stop to think of the software licensing implications of such a merger and the resulting exposure to financial and compliance risks?

Patrick Gunn, VP EMEA ManageSoft said, "Neglecting due diligence in this area could be costly, which is why an analysis of software licensing should be a major part of the M&A process. Businesses need to be aware of license compliance risks and understand the value of software as an asset, which usually outstrips the value of hardware. Software publishers target companies undergoing mergers and acquisitions for audits because they know that these companies are at high risk of being out of compliance. Shared ownership of software licenses is rarely included in the original licenses, giving software publishers an opportunity for increased revenue."

John Lovelock, Chief Executive at the Federation Against Software Theft and Investors in Software (FAST IiS) said, "With the enormous financial uncertainty across the UK and the rest of the world, this year we are expecting a growing trend of businesses becoming acquisition targets. It is important when a company buys or merges with another it needs to know what it is taking on and conducts a robust due-diligence beforehand".

"This must include scrutinising the licensing position and understanding the license implications for the merged entity. In an ideal world, there would be time to gather any detail missing, but corporate transactions usually take place under enormous pressure. We urge all companies contemplating a merger or acquisition to consider the importance of software licensing," added John.


Having a mature Software Asset Management (SAM) process in place can save money, ease integration and ensure licence compliance during what is usually a very complex time.
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