Hogan Lovells 2024-2025 AI Trends Guide - Flipbook - Page 16
Getting deals done in a changing AI environment
AI technologies are attracting significant attention—
including from large “serial acquirer” technology
companies. While acquisitions in the AI space are not
particularly new, the acceleration and deployment of
emerging technologies require acquirers to consider
how due diligence and deal terms should be adjusted,
particularly with respect to technology and related
intellectual property rights. Some AI focus will likely
become part of every technology company acquisition,
with more comprehensive reviews and deal terms for
targets that provide AI products or depend heavily on
AI. Some key considerations for navigating AI in M&A
transactions include:
Have a conversation
A well-structured conversation with the target’s
technologists, businesspeople, and legal representatives
is one of the most effective diligence tools. This live
conversation provides a unique forum for real-time
conversation, which for AI often includes development
of the target’s AI technology and models, explainability
and management of bias in modeling, and data collection
and use.
Focus on data
Improper collection or use of data creates potentially-costly
problems and can even cause a deal not to go forward.
Each type of data may be subject to rights and restrictions
enforceable by others – such as copyrights, personal
privacy rights, contractual restrictions, and regulatory
requirements. In diligence, the acquirer should ask about
the target’s data sources.
Additional
resources
Spotlight
2024 M&A Outlook
Question IP protection for target technology
Not all uses of AI will affect IP protection, but where a target
has actually used AI to create key technology, interesting
questions arise about the scope and strength of the IP rights
available to protect that technology. In diligence, acquirers
will want to understand the sources of the target’s innovation
and competitive advantage and to what extent AI generated
key technology.
Consider regulatory compliance
For technology companies using AI, a changing regulatory
environment will require a focus on compliance policies and
practices. Acquirers will also need to understand the use of
AI for purposes considered “high risk,” whether under new
regulations or existing laws. Any ongoing investigations,
audits, and complaints will be scrutinized, and acquirers
will likely seek risk-allocation provisions related to
noncompliance.
Our team is distinctively positioned to provide sophisticated
support as M&A transactions related to the evolution of AI
technologies raises questions on data use, creates new IP
risks and value, and attract new regulations. Our mergers
and acquisitions team is ranked among the Elite law firms
for Corporate M&A by Chambers USA and our lawyers, in
collaboration with our IP, regulatory, and policy teams,
have acted as M&A counsel to many of the largest and most
sophisticated players in the technology sector.
Authors
John Brockland
Partner
San Francisco
Adrienne Ellman
Partner
New York & Boston
Scott Loughlin
Partner
Washington, D.C.
Jane Ross
Office Managing
Partner
Silicon Valley
David Toy
Partner
Denver
