When acquiring or investing in technology companies, there are specific phases that each transaction goes through, and understanding them is crucial:
1. Initial Contact
The initial exchange focuses on the business model and technology of the target company. The goal is to understand and confirm the strategic intentions of both parties. Typically, a non-disclosure agreement (NDA) is signed at this stage to ensure the confidentiality of the exchanged information.
2. Due Diligence
Following a positive initial contact, due diligence usually begins. A data room is set up where all relevant documents are provided. In the technology sector, data protection aspects and the company's intellectual property rights are particularly important. Additionally, technical, financial, tax, and legal aspects are examined. The focus areas of due diligence should align with the strategic goals and main risks of the business model.
3. Negotiation Phase and Signing
Parallel to the due diligence, negotiations about the structure of the transaction, the purchase object, and the price take place. The goal is to develop a contract that will be signed at the signing stage.
4. Closing
Once the contracts are signed, the transaction is executed — the actual transfer of ownership or the capital increase. Before the closing, certain conditions may need to be fulfilled by the seller or the company (Conditions to Closing). The closing marks the formal completion of the transaction.
After the closing, the real work begins: integrating the target company into the buyer’s structures or utilizing the funds.
Why is all this important?
Each phase of this transaction is crucial for its success and for minimizing risks. If you are not familiar with the process and the usual transaction documents, it is advisable to seek professional advice!
