Questions

What are typical conditions to for a licensing company that sells products to a company that gets bought? Should the contract be renegotiated?

Hi, We are a company that is licensing technology for 10% revenue to company B. Our license is for three years. If company C buys company B (that licenses our technology), company B wants the same conditions of licensing to apply to Company C. But, it might be the case that company C uses our software internally and no revenue gets generated from the software. What are the typical conditions to ask for in this situation? Get a percentage of the sale of the company? How much? Or renegotiate the contract entirely? thanks.

2answers

A lot will depend on your negotiating leverage. Where there's leverage, there's opportunity. But your leverage is going to largely depend on what your license agreement says, and the form of the transaction between Company B and Company C.

For instance, if Company C buys Company B's assets (as opposed to shares), and your license agreement includes an assignment clause that does not allow for assignment without your consent, you have a lot of leverage to impose terms because technically they can't transfer the agreement to Company C without your permission.

If you'd like, I'd be happy to look at your agreement and let you know my thoughts.

Ronan


Answered 5 years ago

What does your current assignment clause state in your contract? This will help understand your options.

Thanks,
Madhu


Answered 5 years ago

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