Built to sell: A tech founder’s guide

At Wedlake Bell, we support tech entrepreneurs and investors through every stage of the transaction, ensuring value is protected and risks are mitigated.

Preparing for Sale: IP and Data Are Key

In the tech sector, intellectual property (IP) is often the most valuable asset. Ensuring that all IP—whether software code, patents, trademarks, or proprietary algorithms—is properly registered, assigned, and protected is essential. Buyers will scrutinise IP ownership and licensing arrangements during due diligence. Similarly, compliance with data protection laws is critical, especially for SaaS, AI, and platform-based businesses.

Choosing the Right Deal Structure

Tech company sales are typically structured as share sales, allowing the buyer to acquire the entire business, including contracts, IP, and employees. However, asset sales may be preferred where the buyer wants to exclude legacy liabilities or cherry-pick specific assets. Each structure has tax and legal implications that must be carefully considered.

Heads of Terms and Confidentiality

Before detailed negotiations begin, parties usually agree heads of terms outlining the key commercial aspects of the deal. These are often accompanied by a non-disclosure agreement (NDA) to protect sensitive information, including source code, customer data, and trade secrets. In the tech space, confidentiality is paramount.

Due Diligence: Tech-Specific Focus

Due diligence in tech deals goes beyond financials. Buyers will assess code quality, open-source software usage, cybersecurity protocols, and scalability of the tech stack. Sellers should prepare a comprehensive data room and be ready to demonstrate robust development practices, clean IP ownership, and regulatory compliance.

The Sale Agreement: Warranties and Indemnities

The share purchase agreement (SPA) will include warranties and indemnities tailored to the tech sector. These may cover IP ownership, software functionality, data protection compliance, and absence of malware or backdoors. Sellers should negotiate limitations on liability and consider warranty and indemnity insurance where appropriate.

Earn-Outs and Retention

In tech deals, it’s common for part of the purchase price to be deferred and linked to future performance—especially where the founders are expected to stay on post-sale. Earn-outs must be clearly defined and measurable, with mechanisms to resolve disputes. Legal advice is essential to ensure these provisions are enforceable and fair.

Employee and Founder Considerations

Key personnel are often central to a tech company’s value. Buyers may require retention arrangements or new incentive schemes.

Completion and Integration

Post-completion, attention shifts to integration. This may involve transitioning customer relationships, migrating systems, or aligning teams. Legal support remains crucial to manage ongoing obligations and ensure a smooth handover.

Market Trends: A Rebound in Tech M&A

After a subdued 2023, the UK technology M&A market is showing signs of recovery in 2025. Deal volumes in the tech, media, and telecoms (TMT) sector moved forward in Q4 2024, with software leading the charge due to its recurring revenues and resilience. Investors are increasingly focused on AI-ready platforms, digital transformation, and scalable SaaS models. A stable political environment, clearer interest rate outlook, and a weak pound have also made UK tech assets more attractive to overseas buyers. As confidence returns, many founders are seizing the moment to exit while valuations are on the rise.

Meet the team:

1. 

   • David Duhig

   • Senior Associate
   • Corporate

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2. 

   • Mark Tasker

   • Partner
   • Corporate

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3. 

   • Tom Boersma

   • Senior Associate
   • Corporate

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