Buying a SaaS business? You will need the assistance of lawyers with specific and deep SaaS experience who also have extensive experience with buying and selling businesses. At Revision Legal, we have the staffing, lawyers, and legal solutions to get the Purchase Agreement finalized, assist with the due diligence, and get the deal done. If there ends up being a dispute, we are also top-tier SaaS litigators. Here are a few examples of difficult practical and legal issues that are common in SaaS acquisition transactions:

Key employees — if key employees from the target SaaS business are remaining with the new or merged entity, various solid and enforceable contracts are needed, such as executive employment, compensation, stock options, and other agreements; if the key employees are not remaining, then severance, non-compete, recovery of IP, and strong confidentiality agreements are needed along with, maybe, negotiated terms with respect to post-closing training and support services for new management

Prepared and ready change of passcodes and authorizations — when the acquisition is consummated, all system passcodes and authorizations must be quickly changed to protect the system and servers from unauthorized access; but, at the same time, the change-over must be smooth and unproblematic

Key client authorizations — some larger SaaS clients may have contractual rights with respect to circumstances where ownership of the SaaS provider changes hands; due diligence must uncover this, and requirements must be met

Subscription Service Agreement automatic assignments — aside from some specific larger key clients, generally, it must be confirmed early on that any and all service subscription service contracts are automatically assignable to the acquiring business

Auto-transfer of subscriber confidential data — it must be confirmed that service subscribers have already consented to the transfer of their confidential data (including subscriber systems access data) to the acquiring business

Software platform host confirmations and approvals — like a business with an office lease, SaaS businesses typically use a software platform host to facilitate the provision of service; if those platform hosting services are expected to continue, terms and conditions must be verified, including obtaining any needed authorizations from the hosting platform

Other third-party authorizations and approvals — authorizations and approvals must be obtained, where needed, from other third parties such as financial providers, investors, licensors, and more

Security and status of any websites being transferred — most SaaS businesses manage and operate at least one website for various purposes; these websites must be in compliance with various statutes (including, potentially, web accessibility and consumer data privacy statutes) and must also have state-of-the-art cybersecurity protocols

Intellectual property matters, including verification of ownership and non-infringement — ownership and/or licensure of the code and software being used by the target SaaS business must be confirmed along with verification of non-infringement and investigation of any infringement claims; in this respect, strong indemnification provisions should be in the Purchase Agreement protecting the buyer

In addition, of course, any SaaS acquisition will entail a significant amount of due diligence to confirm various aspects of the transaction and the business operations. Some examples of important areas of due diligence are:

• Details of services be provided and to which clients
• Payment, invoicing, receivables, and related matters
• Revenue audits
• Compliance with payment of taxes (including employee withholding taxes and potential sales taxes related to the acquisition of the business)
• Review of any third-party vendor or service contracts
• Confirmation of the status of cybersecurity, including breach and attempted breach notifications and obligations
• Status of any remote or off-site access and use of system devices
• Confidentiality and non-disclosure issues
• Compliance with relevant laws and regulations, including building codes and labor laws
• Real property issues for any property being purchased as part of the transaction
• Landlord/tenant issues if any real property leases are being assumed or terminated

Contact the SaaS and Business Acquisition Attorneys at Revision Legal

For more information, contact the experienced SasS and Business Acquisition Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.