Mergers, Acquisitions, Divestitures, and Joint Ventures – Maintaining an ITAM Program through Company Changes

By Ann Marsh, Cargill Inc.

ITAK Volume 6 Issue 8

One thing we can be sure of is that nothing will ever stay the same.  This is true of companies also.  In my experience, companies are always acquiring new companies, changing percentage of ownership of existing companies, and divesting companies that are no longer a strategic fit.  In this ever changing environment of mergers, acquisitions, divestures, and joint ventures (MADJV) , it’s important that you manage hardware and software assets in order to stay compliant, minimize risk and protect your companies’ reputation.

So how do you start?  One of the first things to do is to ensure that your negotiations team is educated on the transfer/acquisition process and why this is important to them and the company.  Normally, these teams are made up of lawyers and senior business leaders.  Identifying and training them will be worth your time.  They need to know that; the transfer/acquisition process takes time (at least 90 days), not all licenses/assets can or should be transferred/acquired, asset management needs to be involved as early as possible, and an understanding of the terms in major contracts is required.  You don’t want your team promising things that are contractually impossible.

Another thing you can do proactively is ensure that you have appropriate terms in your contracts.  Negotiate favorable language for divestures – including the longest transition time as possible – I would suggest starting with 2 years, though 90 days may be what you get.  You also want to ensure your major contracts include language around how to handle acquisitions that you and the publisher understand.

For your own sanity, I would highly encourage using a standard checklist.  There are many detailed steps that need to be completed even on a small MADJV and it is very easy to lose track.  Having your major contracts summarized so you don’t have to re-read them every time is also a huge time-saver and  ensures others are able to back you up when you are out of the office.  If you have a strong relationship with your publishers and your resellers, let them help you – often you can delegate much of the clerical paperwork to them!  After you have a few of these transitions under your belt, you can also work on building some standard templates for communication to help you and your team.

Don’t forget to manage joint ventures if your company is involved in them.  Most software contracts and end user license agreements (EULA’s) state that software can be used for “internal company use” or “for the benefit of the company only.”  Ensure you understand the definition of “company” – often it is 50% ownership or greater and/or controlling interest.  If you are in an industry where percentage of ownership often changes, you will need to be very proactive in managing this area to ensure you are compliant!

For mergers and acquisitions, here are the high level key steps that we have used successfully:

  1. Gather a list of all IT assets in scope – ideally from the sales contract
  2. Have someone perform a full hardware and software inventory if at all possible
  3. Get copies of all contracts, EULA’s, and invoices
  4. Ensure the OTHER company is initiating the transfer documentation
  5. Ensure someone has identified any internally written software and how it will be handled
  6. Get copies of keys, media, etc .
  7. Make any needed one-off purchases to ensure compliance
  8. Update all your internal documentation

For divestures here are the high level key steps that we have used successfully:

  1. Review full hardware and software inventory
  2. Determine software and hardware to be transferred – ideally from sales contract
  3. Determine software/hardware that cannot be transferred.Resolve any issues.
  4. Review internally written software- are you going to transfer it?
  5. Determine transition timeframe if any – if needed, negotiate more time
  6. Ensure new keys are issued for all your enterprise keys
  7. Ensure process is followed for removing all software not transferred
  8. Update all your internal documentation

With a complete checklist and by doing your due diligence, you can successfully survive a MADJV event.  Proper notification, planning, and knowledge of your technology contracts are essential.  Through your efforts, you can help ensure that you have protected your company’s important assets and reputation in the event of a future audit!

About Ann Marsh

Ann Marsh is with Medtronic, Inc.