M&A transactions in the EU and other jurisdictions are usually accompanied by due diligence of the company that is the subject of the agreement. This blog post describes the specifics of legal due diligence in technology M&A in France.
European M&A practice
If you plan to carry out a merger or acquisition of a company in France, which is a member of the European Union, it will be useful to study some aspects of such transactions in the EU.
In the practice of the European Union, the concept of merger is represented by two categories - 'merger by acquisition' and 'merger by formation of a new company'. In the first case, one should understand a transaction as a result of which one or more companies cease their activities without carrying out the liquidation procedure and transfer to another company all their assets and liabilities in exchange for issuing shares in the acquiring company and giving them cash in an amount not exceeding 10% of the par value of the shares issued for this, or in cases where the shares do not have a calculated value, from the calculated parity.
In the second case, one should understand a transaction in which several companies cease their activities without carrying out the liquidation procedure and transfer to the company they form, all their assets and liabilities in exchange for issuing them to the shareholders of the shares of the new company and monetary remuneration in an amount not exceeding 10 % of the par value of the shares issued for this, or in cases where the shares do not have a calculated value, their calculated parity.
In both cases, due diligence of the target company is mandatory.
The merger of technology companies
Mergers and acquisitions of technology companies are different.
First, as part of the due diligence of a techno M&A in France, the buyer determines which IP assets needed to run the business belong to the target company.
Further, it is critical to assess whether the company is the sole owner or whether the IP assets are co-owned with another legal or natural person. It is essential for the buyer to have accurate information on any potential claims against IP assets from third parties, contractors or personnel who were involved in the creation of this intellectual property.
When it comes to the transfer of licensing of IP assets in France, potential buyers need to focus on whether the target company is the exclusive licensee.
If you intend to conduct a takeover of a company in the EU, another key area of due diligence is data protection. With the entry into force of the GDPR, this issue has gained critical weight in due diligence reviews.
Find and check IP information
Information about IP right can be found in open sources such as:
- National Institute of Industrial Property for French IP registrations;
- Office of Intellectual Property for registrations of intellectual property in the EU;
- World Intellectual Property Organization for International Registrations.
Search results usually include the following data:
- availability of any registered license in France;
- owner's name;
- date of registration and possible expiration of the license.
Selective IP registration in France
It is important to understand that not all types of intellectual property are subject to registration in this jurisdiction. Individuals and legal entities can register:
- trade marks
However, unlike most common law countries, France does not provide for copyright registration.
Investors are normally quite alert people, and they don't trust unfamiliar companies. If you intend to conclude an EU deal on the merger of companies, you should first consult with specialists who will provide comprehensive information on the country of your choice. We also suggest that you sign up for a consultation on M&A regulation in France with our experienced legal experts who can also provide assistance at all stages of the due diligence of a French company. For direct communication with us, please fill out the special form on the website.