Finance Monthly Deal Maker Awards 2020 Edition

51 MERGERS & ACQUISITIONS www.finance-monthly.com FINANCE MONTHLY DEAL MAKER AWARDS 2020 PAUL MCADAM Director at Source Code Control Please tell me about your involvement in the deal. Source Code Control conducted the technical due diligence. We were introduced to YFMEP through the BDO accountancy company. (BDO are sponsors of the Thames Valley Barometer report and we had also featured in there .) YFMEP are a progressive company who understood the need for technical due diligence as part of investment. Technical due diligence is of much importance, especially during M&A transactions. Listing out possible security vulnerabilities, the precautions necessary for outsourced development and digital supply chains, intertwined with the fact that software development has become a core element of business value, such due diligence helps us valuate the business at hand. Why is technical due diligence vital to conduct? YFMEP gain an understanding of the quality of their investment and both parties get a “stop-check” by an independent 3rd party which assesses: 1- The software components in use. 2- How well the security is being addressed i.e. patched and kept up to date. 3- Copyright and licensing issues. Without that, the software could be vulnerable, breaking licensing laws and open to ownership challenge! Definitely three things to clear up prior to investment. What challenges arose? How did you navigate them? The biggest challenge in this market is a lack of awareness. In this case we were working with the right people at the right time. However, as with the Marriott case, companies are simply unaware of how modern software is built and licensed. The risk of investing, launching or outsourcing without due diligence is significant. There are a number of legal cases from around the globe to which we can point – here are two good ones: 1- https://www.marketwatch.com/press-release/artifex-software-inc-files-lawsuit- for-copyright-infringement-against-siemens-product-lifecycle-management- software-inc-2019-09-20?mod=mw_quote_news 2- https://wptavern.com/cokinetic-systems-pursues-100-million-gpl-license- violation-case-against-panasonic-avionics You will very, very rarely scan software and find no issues – but the important thing is how you address the issues uncovered and how it plays a part in the plan going forward. We were able to reassure YFMEP that the team were knowledgeable, the software had strong ownership and direction and the team were cognisant of potential licensing issues. Awarded for his involvement in the following transaction: SharpCloud Secures GBP 4.5m Series A Investment From YFM Equity Par tners TRANSACTION REPORT SharpCloud secures GBP4.5m Series A investment from YFM Equity Partners Funds advised by YFM Equity Partners (YFM) have backed a GBP4.5 million investment into SharpCloud Software Limited (SharpCloud) to support the continued growth and roll out of its enterprise SaaS product. YFM’s investment comes from its two advised VCTs, British Smaller Companies VCT plc and British Smaller Companies VCT2 plc, alongside YFM Equity Partners Growth II LP. YFM’s investment will be used to support the continued growth of the business as it scales to meet the market opportunity, with SharpCloud expanding its team in the UK and the US. These newly created roles will enable the business to continue to further develop its market-leading technology and to grow its international client base. Financial Due Diligence was provided by Nathan Willis and Brad McAvoy of James Cowper Kreston, tax structuring advice by Phil Snell and Emma Elliott of James Cowper Kreston, legal advice by Chris Reed and Niall McCooey of Gateley Plc, Commercial Due Diligence by Roger Penney and Geoff Rampton of RPL Ltd, Organisational Review by Anna Cornwallis of Stratton HR and Technical Due Diligence by Paul McAdam of Source Code Control. Daniel Jonas of WK Corporate Finance acted as financial adviser to SharpCloud with Tim Hewens and William www.sourcecodecontrol.co