IT-Projects: Ways to Hold Down Own Business

Russia is now the largest Internet market in Europe and sixth biggest Internet market in the world. With more than 85 million online users it is still showing a massive state of growth. But most importantly with the average online segment investment deal size in Russia being $21.4 million (compare to the world average of $10.2 million) and the most common deal size of $1.9 million.

The issue we addressing here would not have existed a few years ago, but today, as figures and activity grows, the rules of the game become much harder as there is far more to lose and gain.

Today, mergers and acquisitions, including in many cases those going down hostile scenarios, in Russian IT sector are as real as those in commercial real estate, heavy industries and natural resources in mid 1990-s. 

Most of the Internet new entrepreneurs, start-up founders and project ‘parents’ are the same – they love their ‘children’ so much and trying to develop them with such extreme dedication and care that they simply do not have time nor opportunity to take care about basis legal safely issues. Even more, very often they are not familiar with the legal profession at all – most of them are people of creative or technical descend with brilliant ideas and huge inspiration but lack of business and legal experience.

Hence, unsurprisingly it often results in a very poor quality of the initial project’s legal documentation, extremely weak intellectual property, code and brand protection, unfair deals with investors and very delayed contact with lawyers in case of corporate legal emergency.   

What do we recommend

Checking up project and team up with proper legal specialists immediately when:

  • Setting up project’s corporate and legal structure and engaging with investor; most of the investors have strong legal teams and they make sure the documents signed with project’s owner have clauses to get rid of project’s ownershould they not feel comfortable to continue working together; project’s owner may not notice those unless a professional pair of eyes looking at them on him behalf;
  • The partnership structure and owner’s shareholding is showing the very first signs of ‘going through turbulence’ and most likely to experience more problems in the immediate future; the sooner it is exposed – the better! – in majority of cases offence is the best defence;
  • A litigation prospect with yesterday’s partners, shareholders or investors.

MGAP is one of the leading local media and IT law firm with bespoke 15 years experience in M&A and the best in the country Intellectual Property Courts litigation team. We know how to build project’s legal background tied and efficient and how to protect intellectual property from it being taken away.
 

For more information, please, contact

 

Sergei Grachev, Managing Partner               

Anna Alekseeva, Junior Partner, Business Development