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Case Study – M&A Due Diligence on Video on Demand Platform

Mergers/Acquisition Due Diligence: Our client was considering an acquisition of a new video-on-demand technology product company. They hired us to understand the target’s brand strength, development team, technical viability, and customer growth prospects.

Mergers/Acquisition Due Diligence 

By conducting extensive primary research on their TAM (total addressable market), we sought to understand the client’s market demand, their ability to maintain the target’s customers, and the viability of the technology. Technical threats and opportunities associated with the acquisition were also examined in detail.

 

Assessment

The target’s eccentric founder and his (lack of) management style complicated matters as we worked to understand the technical foundations of the product. With no middle-management layer in place at the target, there was concern that the value of the company would disappear when the developers left the building.

To complicate matters further, the desired code base was part of a monolithic product with no clear delineation of what parts did what. This presented an intellectual property challenge as various dependencies were untangled.  

Due to the founder’s personality, extra emphasis was placed on the identification of poison pills, silent partners, ownership structure, and financials. Culture fit was evaluated as the target’s technical team was in Hong Kong and the client’s entire development team was in Silicon Valley.

 

Outcome

The acquisition was completed successfully. Our recommendation included highly lucrative retention agreements for the founder and development team plus a restrictive IP sharing agreement to offset the risks of a shared monolithic code base.

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