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Easy reading is damned hard writing.
Nathaniel Hawthorne

Clip from the December 2002 “Industry Watch” column for

 A tech company looking to be acquired needs to:

  • Stay one step ahead of underwriters by performing due diligence on itself as well as its clients, collecting, managing and updating information in advance of acquisition.
  • Thoroughly examine company assets to understand the true balance sheet and income statement.
  • Resolve outstanding legal issues and blemishes like back taxes.
  • Tie together representations and warranties regarding the accuracy of financial records as stated in the purchase contract.
  • Assess and make current the articles of incorporation, operating agreements, annual reports, votes of officers authorizing action items, list of shareholders and shares subject to vesting.
  • Clear the stock ledger and any related shareholders’ agreements.
  • Get key employee agreements with independent or subcontractors in clear and concise writing as to the impact of the relationship on the business.
  • Safeguard the potent bargaining tool of intellectual property with appropriate trademark, copyright, or patent filings; and nondisclosure, nonsolicitation, noncompetition and assignment of invention agreements.
  • Know the legality of transferring outside licensed intellectual property to assets or company stock in a sale.
  • Have business-specific (not boilerplate) license agreements in place.
  • Document key customer and supplier relationships in writing.
  • Provide incentive packages to maintain loyalty among key employees whose departure could affect the value of the purchase price.
  • Talk to investment counselors and bankers, business brokers, industry godfathers, and people involved in tech industry purchase and sales to get the word out to the right audience.

Reader Comment:

4 December 2002

Dear Janis:
Great article in the latest issue of Interface Tech News, on "Positioning for Mergers & Acquisitions." I don't know your background, but I am always impressed when a reporter masters a technical subject well enough to 'get it right.' It appears to me that you did. I am an M&A advisor/business broker in Portland, Maine, with 22 years experience, so I guess I would know. Glen Cooper, CBA, BVAL,

Certified Business Appraiser, Business Valuator Accredited for Litigation, President, Maine Business Brokers' Network. Web site:

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