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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Commercial Law

Date & Time
  • event Date

    Wednesday, February 28, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will explore the opportunities, risks, and rewards of acquiring an AI company. The panel will discuss the unique due diligence concerns on a target in the AI space, special considerations for drafting the purchase agreement, and how these deals require careful allocation of risk through indemnities, representations, warranties, holdbacks, escrow, and price adjustments.

Faculty

Julia B. Jacobson
Partner
Squire Patton Boggs

Ms. Jacobson is a partner in the Data Privacy, Cybersecurity & Digital Assets Practice. She offers practical and tactical counsel on privacy and cybersecurity compliance strategies, data breach response, technology transactions and marketing initiatives for national and multinational organizations. Ms. Jacobson assists clients with the design and development of privacy-sensitive policies for the collection and use of personal data. She regularly advises businesses on the privacy and cybersecurity aspects of environmental, social and governance (ESG) programs, ethical data use, machine learning and artificial intelligence, vendor contracting and management and business sales, combinations and acquisitions.

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David W. Kantaros
Partner
Foley & Lardner LLP

Mr. Kantaros serves as Co-Chair for Artificial Intelligence within Foley & Lardner’s Innovative Technology sector and is a member of the Private Equity & Venture Capital and Transactional & Securities Practices. He represents venture capital and private equity funds as well as publicly and privately held corporations in the emerging technology and life science industries. Mr. Kantaros’ experience includes: representing private equity funds, family offices, and public and private companies in mergers and acquisitions, joint-ventures, public offerings, and control investments; advising venture capital firms, strategic investors, and high net worth individuals and investment groups in private placement activities, including preferred stock and secured and convertible debt financing in technology and life science companies.

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Zac Padgett
Partner, M&A and Private Equity
Orrick, Herrington & Sutcliffe LLP

Mr. Padgett focuses on supporting companies and investors developing technologies for nascent industries like energy storage, alternative fuels, carbon capture, hydrogen, agtech and digital infrastructure. He is passionate about developing innovative technology solutions and AI tools to enhance legal services. Mr. Padgett helps lead the firm’s MAPE 2.0 project team, a platform that transforms M&A execution, which won the Financial Times' Reinventing the Legal Practice category.

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Description

The surge in the use and development of AI systems and products, particularly generative AI, has increased interest in investing in and acquiring companies that offer AI solutions or that have integrated AI into their operations. However, acquiring a company that develops or uses AI technologies involves a myriad of unique issues that span the due diligence stage to preparing the sale and purchase agreement and related documents.

Buy-side advisers investigating a traditional technology company can easily review its proprietary software for standard intellectual property concerns. However, the review of an AI company's chief product is far more nebulous because the company's value is typically derived from datasets and proprietary models that absorb and analyze information. When conducting diligence on an AI company, the scope should be revised and expanded to include the company's rights to its models, data, and outputs as well as privacy, cybersecurity, and any potential legal grounds on which the target may be exposed to liability.

There are also specific considerations and concerns when preparing the sales and purchase agreement and other required documents when acquiring an AI company as the standard purchase agreement may not adequately address the risks involved. The representations and warranties contained in an agreement should describe how the company uses its AI assets and shift the risks associated with those assets. Counsel should also assess warranty and indemnity insurance policies and be aware that transferring ownership in AI technologies may trigger increased regulatory scrutiny from an investment and antitrust perspective.

Listen as our authoritative panel discusses the unique aspects of an M&A deal involving an AI company. The panel will explore key considerations for counsel to avoid several pitfalls inherent to these deals and they will provide a tailored approach that goes beyond standard acquisition agreements.

Outline

  1. Overview of the AI M&A market
  2. Opportunities, risks, and rewards with AI targets
  3. Pitfalls unique to transactions involving AI
  4. Considerations and questions to ask the target during the due diligence phase of the deal
  5. Tailoring the sales and purchase agreement and other required documents to address the risks involved with AI
    1. Allocating risk through indemnities, representations, warranties, holdbacks, escrow, and price adjustments
    2. Assessing warranty and indemnity insurance policies
  6. Increased regulatory scrutiny
    1. Foreign direct investment (FDI) review
    2. Antitrust review
  7. Additional issues and considerations

Benefits

The panel will review these and other key issues:

  • What are the unique characteristics of an AI company that require an expanded and revised scope of review during the due diligence stage of a deal?
  • What are some key diligence questions to ask of acquisition targets working in the AI space during the evaluation process?
  • How should the purchase agreement and other required documents be tailored to address the unique risks involved with AI?
  • What is the current regulatory framework governing AI deals that counsel should be aware of?