Domain Names in Mergers & Acquisitions
Domain names are a critical element in mergers and acquisitions, requiring meticulous due diligence. The intricacies of M&A activity demand careful preparation, expert advice, and thorough consideration of all intellectual property rights involved. However, an area often overlooked is the transfer of license rights to the domain names held by the business being acquired.
Unfortunately, domain names frequently get missed in M&A transactions. They are among the easiest and most common details to overlook. There have been high-profile cases in Australia where prominent brands failed to properly manage domain name transfers during M&A deals. For instance, a major utilities company mishandled the transfer of their primary .com domain. Although the domain was transferred under their management, they failed to secure the necessary license. This oversight means that the other party can potentially reclaim the domain name at any time, jeopardizing the company’s entire online operation.
Domain Name Risks in Mergers & Acquisitions
In Mergers and Acquisitions (M&A), domain names represent critical digital assets that require thorough due diligence to avoid potential risks. Overlooking domain name risks can lead to significant issues post-transaction, including legal disputes, loss of digital presence, and brand damage. Proper evaluation of domain name portfolios ensures that the acquiring company maintains control over vital online assets, preserves brand integrity, and mitigates exposure to potential liabilities.
Legal Disputes: Incomplete or incorrect ownership records can lead to legal challenges, disrupting business operations and leading to costly litigation.
Loss of Digital Presence: Failure to secure all associated domain names can result in losing control over the company's online presence, impacting brand visibility and customer trust.
Brand Damage: Acquiring companies may inherit domain names with negative reputations or associations, potentially harming the brand's image and market position.
History Checks: Domain names in dispute, IP complications and other legal matters should be reviewed to ensure that you are not inheriting headaches
CHECKLIST
Domain Name Due Diligence Checklist for Mergers and Acquisitions
1) Ownership Verification
Confirm the current registered owner of each domain name
Ensure the domain names are registered under the company’s name, not an individual employee or third party
Verify the expiration dates and renewal status of all domain names
Confirm any current or historical ownership disputes or issues associated with domain names
2) Portfolio Assessment
Compile a comprehensive list of all domain names owned by the target company
Identify any variations, typos, or related domain names that should be included
Assess the strategic importance and usage of each domain name (e.g., primary website, email services, marketing campaigns)
Identify all domain name Registrars, Hosts, DNS Providers as well as the Registrant, Admin and Tech contacts associated with domain names
3) IP Review
Verify that all trademarks and intellectual property associated with the domain names are properly registered and up to date
Ensure that domain names do not infringe on third-party trademarks or intellectual property rights
Review any UDRP history, IP disputes or known cybersquatting cases that may impact your business in the future
4) Technical Assessment
Perform a security audit of the domain names, including DNS settings and SSL certificates
Assess the technical infrastructure supporting the domain names (e.g., hosting services, email servers)
Ensure that all critical services associated with the domain names are secured and protected
Ensure that domain names are properly secured, have multi-factor authentication and appropriate locks
5) Transferability
Confirm that all domain names are transferable and free from any restrictions or encumbrances
Map all domain name Registrars and transfer processes
Review all domain names for Registrar locks and Registry locks and identify the personnel authorized unlock domains
Review and transfer all licenses associated with the domain names to the acquiring company
Ensure there are no third-party claims or liens on the domain names
6) Document Everything
Document all findings and create a comprehensive report on the domain name due diligence process
Document the financial costs of the domain names, including renewal costs, DNS costs and SSL costs
Ensure all stakeholders are informed of the status and any potential issues related to the domain names
Develop an action plan to address any identified risks or gaps in the domain name portfolio
Keep a Checklist and ensure that all tasks are ticked off before finalising the M&A
About brandsec
brandsec is a team of highly experienced domain name management and online brand protection experts. We provide corporate domain name management and brand enforcement services, helping brands eliminate phishing platforms across the internet. Supporting some of the largest brands in the region, we offer innovative solutions to combat threats across multiple industries.