Today, the largest number of M&A deals take place in the financial, consumer and technology sectors. At the same time, the introduction of technologies and innovations in other areas is growing exponentially (fintech, agrotech, etc.), respectively, and the number of M&A transactions in this direction will increase.
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This blog post discusses key legal issues related to Belgian technology M&A transactions. Clients wishing to acquire a technology business in Belgium can benefit from the services of M&A specialists who specialize in the technology sector. Technological innovation can sometimes be difficult to grasp, which means that an expert with the necessary knowledge of the technology can be the key to achieving a successful deal.
Save valuable asset
Since technology and intellectual property (IP) are the most valuable assets for the acquiring technology company, a thorough and comprehensive due diligence of such assets is necessary to ensure future revenue streams, limiting legal action. Procedures in technology M&A transactions in Belgium usually focus on intellectual property, IT, asset dispute resolution in Belgium.
Another area of due diligence in M&A transactions in Belgium covers privacy and cybersecurity issues. Failure to comply with applicable data protection laws entails serious risks for buyers. Violations of data protection laws in the European Union, since the adoption of the GDPR, are subject to huge fines.
Recent serious data breaches in the world's largest tech giants have highlighted the risks associated with data security.
They lead to companies facing lawsuits from shareholders, government investigations, huge costs, and, most of all, serious reputational damage.
Buyers must request the following documents during the due diligence process for technology M&A transactions in Belgium:
- on data protection (for example, confidentiality notices, data processing agreements, data exchange);
- documenting technical and organizational measures in the field of IT;
- documented communication of data protection officers;
- protocols of personal data violations;
- protocols of compliance of IT programs with GDPR requirements;
- litigation on data protection issues (for example, correspondence with legal authorities);
- data privacy insurance.
Another topical issue is due diligence of Belgian technology mergers and acquisitions transactions that relate to IT (for example, encryption, access restriction, passwords). This due diligence is usually carried out by the buyer's CIO, who is involved from the outset in a technology M&A transaction in Belgium.
Registered intellectual property
You can register Benelux trademarks at the Benelux Trademark Office in The Hague. Obtaining a license for European trademarks is available from the EU Intellectual Property Office in Alicante (Spain). Belgium does not have a separate trademark regime.
You can register a patent in Belgium by filing an application with the Patent Office of the Intellectual Property Office of the Ministry of Economy or with the European Patent Office.
Supervision of the intellectual property of employees
When conducting due diligence on a Belgian target company, the following documents must be checked on specific points:
- in relation to employees: individual employment contracts, rules of work, behavior, instructions, authorizations or waivers in relation to IP rights;
- for contractors: service contracts.
Employment contracts or agreements with contractors usually contain specific provisions on intellectual property (IPR transfer).
Transfer of IP rights in Belgium
The employer and employee are free to establish any provisions on the transfer of intellectual property rights in an employment contract (or in a separate agreement).
It is recommended that a clause be inserted into the employment contract stating that the employer will own the inventions and be eligible to apply for patent protection in Belgium.
Transfer of licensed intellectual property in Belgium
In some cases, technology or assets acquired as part of a Belgian technology M&A transaction will either restrict the purchaser's ability to use those assets or discourage technology transfer in general.
The purchaser must confirm that all relevant rights have been transferred. In particular, if the software was not created by an employee, it is important that all rights are expressly transferred to the seller.
In any M&A transaction, the processes must be adapted to the type of business being acquired. Due diligence of technology mergers and acquisitions in Belgium is a key step to success.
If you would like to register a business in the technology sector in Belgium, please contact our specialists.