Software Company Acquisition - International

J

jamesf

New Member
Jurisdiction
California
Hello,
Our LLC is a Virginia LLC. We have a software application (Web App).

A Foreign company has told us they covet our product to sell in the US with their US staff. It makes sense for them to have the type of web app a they are in the same industry but they have not developed their apps to work in the US, and it would be quite costly.

We signed and NDA, have begun talks and they have proposed and we agreed to the idea of an Acquisition.
I have asked for an offer.
They responded by sending a MOU prohibiting us from seeking other buyers for 6 months. There is no offer in the MOU. It states - governed by New Zealand laws.

I am going to tell them today that I want to have a deal in theory at least verbally, in terms of price before I sign anything of this nature.

I do not agree with the duration of the term ( I'd allow maybe 3 months). I don't even know yet if they can complete a cash deal. Don't wish to be hamstrung for so long after a failed deal.
I would like to have the terms governed by US law.

Reasonable or right to demand that?
Thanks for any advice!
 
jamesf said:
Reasonable or right to demand that?
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You should not to discuss any merger, acquisition, or company proprietary information unless you have retained an attorney to represent your interests.

You are setting yourself up to be scammed, perhaps even destroyed.
 
We do have an attorney. He has demanded that we have them write this to be governed by US law. Buyer is firm it be governed by theirs.

All other points are under attorney review and are acceptable with the possible exception of having an offer before agreeing to exclusivity. Is the International Law Governing the transaction absolutely unacceptable? If it matters the organization is well known, has clients we share and although any deal can go bad I am confident a scam is not in play here.
Thanks for any advice,

I'll add that I am looking for some other opinions. My Attorney is trusted but other perspectives are appreciated.
 
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jamesf said:
I'll add that I am looking for some other opinions. My Attorney is trusted but other perspectives are appreciated.
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It never makes any sense to me that people get advice from attorneys and then ask strangers on the internet to second guess the attorney's advice.

jamesf said:
Buyer is firm it be governed by theirs.
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Then your choice is obvious. Either accept the buyer's terms or don't do the deal.

jamesf said:
Is the International Law Governing the transaction absolutely unacceptable?
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Only matters if it's unacceptable or acceptable to you. It's your business, your decision.

jamesf said:
If it matters the organization is well known, has clients we share and although any deal can go bad I am confident a scam is not in play here.
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You are certainly free to make your decision based on that confidence.
 
adjusterjack said:
It never makes any sense to me that people get advice from attorneys and then ask strangers on the internet to second guess the attorney's advice.
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I appreciate that opinion. I have a dialog with my Attorney and I probe and suggest and he responds. We go back and forth on points over the years. We have never worked on a project like this to date.

You may be right however.
My real unanswered question for him which he didn't answer to my satisfaction was "Why not their country's laws?" He feels having to travel to defend is reason enough and said he doesn't need to research the laws any further. I'll take this discussion back to him and if I do not get a satisfactory answer I may retain someone else to work on this particular issue.
Thanks guys appreciate the strong opinions.
.
 
You may need to hire an attorney in their location to get the best advice or a US attorney that is familiar with New Zealand laws to confirm what that means to you and "why not?". But at the least, you would have to travel there and use their courts.
 
hrforme said:
You may need to hire an attorney in their location to get the best advice or a US attorney that is familiar with New Zealand laws to confirm what that means to you and "why not?". But at the least, you would have to travel there and use their courts.
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That's a good point about the local attorney. I will pursue that with my Attorney's knowledge. Thanks!
 
jamesf said:
My real unanswered question for him which he didn't answer to my satisfaction was "Why not their country's laws?" He feels having to travel to defend is reason enough and said he doesn't need to research the laws any further.
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I would think just the cost of traveling to New Zealand for a protracted litigation would be reason enough not to accept the laws of New Zealand.

You also have to be careful about the where. Your contract can specify that the laws of the US apply but it should also specify that any litigation take place in your own venue otherwise you could still end up in court in New Zealand.
 
We have replied with a version/requirement that we mediate in the US. Removing the governing Laws of New Zealand requirement. We'll see what transpires.
 
jamesf said:
We have replied with a version/requirement that we mediate in the US. Removing the governing Laws of New Zealand requirement. We'll see what transpires.
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Just a note that they accepted all of our demands, including to mediate in the US.
Thanks for the support folks.
 

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