Carly Gulliver
What are people talking to their lawyers about when it comes to tech? Welcome to Inside Tech Minds from Addleshaw Goddard. In this podcast, we're sitting down with technologists, investors, business leaders who are at the heart of the biggest tech deals, innovations and disputes. I'm Carly Gulliver. Let's dive into today's episode.
Hi, James. Hi, Damon. Welcome to Inside Tech Minds pod. It's great to have you here today.
James Dawson
Thank you, it's very good to be here.
Damon Rosamond-Lanzetta
Yeah, really pleased to be here.
Carly Gulliver
So I've been waiting for you both to come on this pod for quite a while, mainly because of our very interesting chats that we've around the great tech transactions that you're working on. I've been lucky to be a part of some of those myself. So I'm really excited to hear what you have to say today about those types of transactions and how you've been working together recently. James, do you want to start by introducing yourself?
James Dawson
Sure. So I'm James Dawson, a partner in our corporate M&A team. I've got over 20 years, 25 years of experience of doing tech deals. think I first got into them, believe it or not, and it sounds a bit alarming, but at the turn of the century, when I started doing deals for Tiscali, the World Online, the internet service provider.
Carly Gulliver
Brilliant! And Damon, how about yourself?
Damon Rosamond-Lanzetta
Yeah, I'm head of the tech sector at AG. So technology has always been at the heart of what we do in AG. And while our tech sector actually is quite new, our expertise is I think, but, and we've been doing technology deals for a huge amount of time, leading transactions and supporting some of our clients on some of the biggest technology deals that they've got. And really looking at how technology transforms the way in which they do business. We've supported on Apple Pay, we've built mobile banks for HSBC, really, really keen to see how we can support businesses. We help Primark put in place their online click and collect solution. So really, really helping see how business has transformed. My day job, I'm an advisor in commercial and IT law and been advising clients for over 20 years like James on technology aspects of all their major deals.
Carly Gulliver
Brilliant. So between you both, I think we've got loads of experience in tech transactions and also
James Dawson
Half a century I think, Carly.
Carly Gulliver
Wow. Unfortunately, we don't have half a century worth of time to cover this today, but I'm sure we can still get through quite a lot. I mean, what type of transactions have you both been working on recently?
James Dawson
So Damon and I recently worked together on an interesting deal in the high tech sector. We were working for a client called Halo Laboratories and it was their acquisition of Plessey Semiconductors, which is a very interesting technology business based down in Plymouth. And what they do is they develop and manufacture micro LEDs, which are extremely small lights, which will multiple thousands of them will fit on a pinhead for use in AR VR headsets, so augmented reality and virtual reality headsets.
Damon Rosamond-Lanzetta
Yeah, and great deal to work with James. And I think for me, was really fantastic because we were looking at cutting edge technology, wearable technology is a real growth area, smart glasses, being able to engage with your environment and also the digital world at the same time is a really exciting place. But in terms of what we do on a work front, this was bringing together James and that corporate acquisition side of things, as well as some really key commercial relationships, which were actually important for making sure that the acquisition side of the deal stacked up and would deliver value for people through the years.
James Dawson
I always get excited when I need Damon on one of my deals because I know it's not just an ordinary acquisition or disposal where you're buying an asset, selling an asset, and that's the deal done. I know that if I need Damon, that means there's going to be a long lasting life to the transaction with long-term service agreements inevitably required to assist how the business runs, how IP is used in those businesses and various other aspects, which just give it a much more and an intricate and interesting nature.
Damon Rosamond-Lanzetta
Yeah, and it’s great working with James.
Carly Gulliver
I mean, James, a question for you. How do you go about the start of a transaction, tech transaction like this that's going to involve a lot of different stakeholders, a very interesting technology, clearly lots of hurdles, and it's going to involve drawing in the specialist team. So taking a step back, what's your advice at the start of a transaction like this in terms of how you go about it?
James Dawson
I think the key thing for us to understand right at the outset is what is the client hoping to achieve? What are the real focuses of their business plan and their objectives? Because for us to understand that is fundamental to being able to advise effectively. And normally there are multiple strands and quite often the acquisition is just the beginning and then it's a question of how are they going to use whatever intellectual property is there? How can they use it going forwards? Are they looking to build some technology with a view to them selling it or licensing it? And what is their ultimate goal? It's not just, we've got a transaction, do it on day one and it's done and over with. There's a lot more of a long-term horizon and understanding that we need to undertake to be able to formulate our advice and the team around it.
Carly Gulliver
And would you say you'd like to be involved in those conversations sooner rather than later than given some of those complexities?
James Dawson
Yeah, absolutely. The best thing for us is an early conversation when a client is still considering making a bid for an asset. The worst circumstances are when you get that panicked call because somebody's already signed some sort of exclusivity or heads of agreement and then they just come along and say, can you just have a quick look at this and tell us it's all all right and then please go and negotiate the definitive agreements because then we're always slightly on the back foot, slightly playing catch up rather than understanding the philosophy and the rationale of what they're doing and why.
Carly Gulliver
Yeah, I mean, as you know, I'm a corporate lawyer myself and I always say that to my clients. You want to create the illusion of competitive tension or hopefully have some competitive tension. That's the better position to be in and then leverage that so you can win key deal terms earlier, get yourself in a great position and then go into exclusivity and embark on the transaction rather than the other way around. It can be quite hard to row back otherwise, can't it?
James Dawson
Yeah, absolutely. And we have got some great clients who are very good at getting us involved earl, but you know, we do our best.
Carly Gulliver
From your perspective, what's really important on a tech transaction to look at?
Damon Rosamond-Lanzetta
Thanks, Carly. And I think first thing is that early engagement really helps. And an active engagement with what the client wants to achieve. To give an example, we did an acquisition recently for a client and I had an early-stage meeting with the technology lead and he was really enthused about the client channel. So the mobile app, he thought it was a fantastic journey, and he was really excited about being able to acquire the company and actually bring that in so that they could move the buyer's offering onto that platform. So we had the discussion. We went off, he started doing the technical due diligence. We started doing the legal due diligence. We met up a couple of weeks later and there was a slightly awkward silence after which he pointed out that actually it wasn't as whizzy and fantastic as it looked. And in fact, there was some serious technical issues. We have discovered quite significant issues on a licensing front. We've also worked with clients where they found real technical challenges about being able to execute on the deal. And actually, if you can't move your clients onto the platform or the target's clients onto your platform, then actually that can be a deal breaker in itself. So yes, technology is so embedded in business now that even if it's not a key driver, it can be a barrier to actually delivering the deal as a whole.
Carly Gulliver
I was just going to ask, do you find that more difficult in certain sectors? So, you know, the one that springs to my mind, something like FS where, you know, you're seeing these banking tech transactions, does that add a different or an extra layer of complexity? Or is it something that's relevant across all sectors?
Damon Rosamond-Lanzetta
I mean, think the financial services sector, obviously as a sector, we've worked with a lot of clients on putting in place new technology. The days of going into a bank and speaking to your bank manager are to a great extent long gone. People want to be able to do everything on their mobile phone. So that means you've got to have the systems that can support that. But banks, particularly the traditional banks have been around for years. So they've got technology stacks, which are layered upon legacy systems with new systems. So they can be sort of quite a monster there, but really probably the biggest challenge on an acquisition I think is probably that legacy piece when you've got that whole history behind it.
James Dawson
We have worked on transactions in the financial services sector where the deal's been signed and big deals that have gone on for considerable periods of time, but they're never completed because they weren't able to integrate the technology platforms and they just hadn't realized that before the deal was signed.
Carly Gulliver
Which I imagine can be quite costly. And we could do a whole other podcast about digital transformation and some of the issues that they throw up in terms of success rates and costs and things like that, we? Which of course is all something which you need to remember during the midst of a transaction because we're focused on execution, but then the business has the integration to be concerned about.
Have there been any obstacles in your experience as a strategic M&A lawyer that have been very difficult to overcome in the past?
James Dawson
What, in the last 30 years, probably one or two. I think the most entertaining obstacle I can recall was on a deal where we were selling an internet service provider business and there was an escrow in place for 45 million pounds, which was there in order to protect the purchaser for the subscriber numbers in the business being transferred. We knew it was probably going to cause a problem when the CEO of the acquirer on the day of completion announced to the world via the media that they'd bought this asset and they'd opened the cupboard and the cupboard was bare. So we suspected at that point it was going to be a bit difficult and that led to 18 months, two years worth of dispute over the 45 million in escrow. But the highlight of that was one of the final negotiations and I was sitting in a room with a number of lawyers and our commercial client who was getting slightly upset at the rate of progress and decided to at one point stand up and start removing his clothing. So he started with his jacket and was then about to take off his shirt or started to motion that he was going to take off his shirt and started exclaiming in a quite emotional way to the counterparty that they'd have the shirt off his back if he wasn't careful and he was not going to allow that. And it was interesting how that did change the dynamic of the discussions. And we did finally agree later that week, I think, the way that the 45 million should be divided up.
Carly Gulliver
It's quite interesting negotiation technique.
James Dawson
I'd not seen it before and I haven't seen it since, even though I have mentioned it to a few clients as a negotiating tip, but none of them have taken up the use of it. It's definitely a last resort, but it definitely changed the dynamic of the discussions.
Carly Gulliver
So it sounds to me together you've worked on a number of transactions. We've heard a few examples there of transactions you've worked on together more recently and also some things to look out for on the deal. Are you seeing any particular themes at the moment in the world of tech and AI?
James Dawson
I think what's becoming interesting is how the old and the new are smashing together a bit. We're seeing an increase in activity where you've got providers of infrastructure, whether that's power, real estate, construction to the tech businesses. I think what's amazing is we've managed to get as far through this discussion as we have without mentioning AI, which Damon is now smiling because he knows if we'd mentioned that at the start, we would have been derailed and we would have spent the whole time talking about AI. But I think what it's important for people to realize is AI is obviously everywhere and is hugely important, but there's a huge amount of infrastructure and growth around the services that go into how AI actually performs its function. There's huge data centres, huge power requirements for those data centres, huge pieces of real estate that have to sit on it all of that and all of the attendant aspects which are providing services to tech but aren't per se technology. And we're seeing a huge increase in interest in that and people wanting to invest in those aspects of it because I think there's a realization that AI isn't going away. It is only going to mushroom, but it's not just the technology and the front end of how the technology is being used in different. There's all of this tale of other assets that are required and investment that's needed for it. And I think there's a huge amount of work for us to do there as well.
Carly Gulliver
There's that whole piece around digital infrastructure as well as the conversation on AI. how about you, Damon, what are kind of the themes that you're seeing at the moment?
Damon Rosamond-Lanzetta
I there are sort of, maybe I pick up on two things. The first thing I pick up on is actually businesses that are evolving and suddenly seeing value in their technology solutions and potentially looking to expose that. I mean, obviously one of the greatest example is Amazon, which obviously used to be started out as a book delivery company, now from Jeff Bezos' garage, but now is a huge provider of web services and data centres. And we've seen that with clients where they're identifying what was a support business and now looking to sell that on and actually generate value. So that's one thing, which is identifying that technology solution that they can do it. And I think AI may increase on that because a lot of AI solutions are built on the backdrop of the, know, open AI or anthropic platform. And what the value is being added by is by people coming up with front ends that can then utilize those LLMs. So I think that may be there. There's sort of a real boost to that spin-off piece. I think the second one I would pick up on is just the sort of integration of technology. And I don't think people always realize that when they're looking at disposals or acquisitions, how difficult it can be to unpick some of these solutions.
Carly Gulliver
AI, as you said, that's an absolutely massive subject. mean, what I'm hearing from a lot of my clients is that's so vast. So, you know, where do they start? What should they be looking out for? I think we're a bit more advanced now, we'd all agree as businesses around, you know, whether or not AI should be used as a solution, I think, that, you know, that train has left and everybody now appreciates that they need to be on it. But the question is, how do you implement that safely? How do you go about, you know, what type of AI you use, where you put your costs? I mean, what are clients talking to you about when it comes to AI?
Damon Rosamond-Lanzetta
I think that everyone can see the opportunity. one of the things that's often coming up is what do I use it for? What's the best use for it? And I mean, as a law firm, we're very lucky. We ran lots of pilots, lots of tests to identify the solutions that seem to work well for due diligence, for drafting. We were able to really test that. Whereas a lot of clients, they're being presented with these shiny new toys, which is pretty common in tech as a whole. Here's a shiny new thing, you should buy it. But really not sure how they're going to use it and so trying to then look at how they can deploy it within their business, I think is the real challenge and do so safely. The risks of AI, there's still cases of hallucination. You've got the legislative regime around the world, although yeah, whilst Europe sort of took a lead with the AI omnibus, they've rolled back a little bit, but you are moving into a space of regulation. You're using personal data on it. So there's a real concern around where that's going as well as all the challenges which we've seen through court cases. So Getty the images around the use of IP. So I think people are firstly trying to understand the usage, but then having to work through this long list of concerns. so whilst we are seeing more deployment there definitely are challenges around it. I think the thing we're probably starting to see now is that people are possibly moving beyond just using AI to act as an assistant to the workforce, but actually looking at solutions which may sort of actually replace some of the workforce. So I think that's the next pivot that I see in AI is. Moving from the copilot type solutions, which are going to help you to actually looking to put in place processes where AI is to gain the biggest efficiencies is probably going to be replacing humans.
Carly Gulliver
And you mentioned there that AI Omnibus, what's that for the kind of non?
Damon Rosamond-Lanzetta
So the European Union recently, possibly due to concerns that it had gone too far in regulating AI, issued legislation called the EU Omnibus, which effectively indicated that they would loosen or lessen the impact of some of that upcoming legislation across a range of areas. So the digital omnibus, it's almost Europe reacting, I think, to some of the concerns that it's over legislated.
Carly Gulliver
I see. So an attempt really to regularize some of that AI regulation.
Damon Rosamond-Lanzetta
Well, think if you look, you've got sort of on the one extreme, possibly you've got the US, which is obviously really keen to promote the use and development of AI and become a centre. You've got the UK, which has taken a bit of a middle line where we've not gone for central legislation on AI, but looking to individual regulators to try and legislate for it in their specific area. Intended to be pro-AI, we've heard about the investment in AI that the government's going to support. But then you've had Europe, which was very quick off the mark to put legislation in place, which to a great extent was applauded at the time. But I think as things have developed, some have seen that as being an area where it's possibly holding back investment and development in Europe because it's not seen as friendly an environment as other jurisdictions.
Carly Gulliver
Well, that's very helpful to know. you, Damon. I mean, James, from an M&A perspective, I mean, in my experience at the moment, I'm coming across clients who are looking at AI in their investment case. So for example, an investor is going to be looking at how impacted an asset might be by AI. So from a kind of defence perspective and what does the runway of that investment look like because of a potential curveball from AI. But also is it something which is capable of being scaled or accelerated to add value in the future by AI and then also how they can use AI in that investment and process, not just in terms of deal delivery and sourcing deals, but then also in terms of automation and reporting and life after the deal as that deal then becomes part of a wide portfolio. So I think there's lots of discussion around value creation in AI. What I'm not seeing so much of just yet is true native AI assets which have come to market rather something which is more of a point solution. What are you seeing in the context of AI M&A?
James Dawson
Yeah, I think what we've seen so far is sort of adjacent type AI being used rather than the native assets. There's a huge amount of businesses where it's part of an offering, but it's not necessarily the infrastructure in which AI itself is owned. The reality is there aren't that many of those and they're now pretty big and pretty expensive and unlikely to move, I think as time progresses, the people, the individuals who have control over those assets will ultimately have control over quite a lot of the dynamics of the way our society develops probably because that's the infrastructure which is going to underpin a lot of what our systems depend on. But I think for us as lawyers, the most exciting thing about it is it should remove a lot of the the grind of the job that Damon and I grew up with all those years ago, we're having to turn through documents and turn through drafts of things where we are now in a position and this will only increase. A lot of that grind is removed, leaving lawyers to think about the more interesting aspects, the more judgmental features of deals where you do need to apply a bit more intelligence and thought, which just should make the job more engaging. I think we're at a point where across industries, it now needs to be embraced. There's no point being afraid of it. There's no point trying to pretend it's not there. You've just got to embrace it and work out how best to use it.
Carly Gulliver
Yeah, I mean, I completely agree with that, James, probably no surprise. And I think it's about, you know, finding the right solution within businesses where you can use AI and potentially using it part of a process rather than, you know, trying to transform everything at once.
Damon Rosamond-Lanzetta
And I think in terms of AI, it's quite interesting. We supported a client who was buying a business where one of its key selling points was its deployment of AI. And it was quite interesting that as we went into the diligence exercise, looking at it from the legal point of view, there were some challenges around the use they were putting that AI to. And this was in the intellectual property space. So it was you know, what they were using, what they were putting into that AI system and then also what was coming out of it. But ultimately the product itself wasn't that innovative. It was using generic AI solutions and what it was, it was the way they were using it, where they were giving the value. And ultimately that deal didn't proceed, not because of the AI piece, but it was quite interesting that when you looked at the business on the face of it, went to their website, it was an AI powered business. But actually, as you looked into it in more detail, both on the legal and the practical front, you discovered it wasn't really, it was using AI to sort of help them do something which frankly they could have done without AI, but do it more quickly. But they were very prominent in saying we are an AI business. So I think there's definitely an element of adding AI to either the name or the business description to try and generate a little bit more buzz and excitement and possibly to add to the multiples.
Carly Gulliver
So AI, massive theme, but clearly something which we'll see more from an M&A perspective, but also, you know, from an investment perspective. What do you think business leaders and, you know, members of the C-suite should be thinking about at the moment when it comes to tech transactions?
James Dawson
Lets do more of them.
Damon Rosamond-Lanzetta
Absolutely, do more of them. Technology has so much potential to transform a business, whether it is enhancing your supply chain, whether it's enabling you to meet your regulatory requirements. I obviously there's a real concern around modern slavery, the provenance of products and goods. And there are solutions there that distributed ledger technology which can help you with this. There are technology solutions which enable you to engage with your customers. As I said earlier about the move from going into a bank to doing it online, how much of our lives do we spend stuck to a phone? And how much do we now expect to be able to do things through our phone? Whatever your business, technology is something which can help you operate more efficiently, reach more customers, do so more cheaply, and also engage with your employees. It's such a key part of any business that C-suite needs to be looking at it, needs to be challenging themselves as to what they can do to improve the business. I read recently that Nike had actually got rid of their chief technology officer as a role, which wasn't because they were dismissing technology, but because they thought it was so integral that that role became part of the COO, the chief operating officers. So for them, technology is just a key part of the business. It can't be just compartmentalized. It is a real driver to getting business growth and business value.
James Dawson
Yeah. And the thing that I would add being less flippant is that the process that we often see when plants are thinking about buying a new technology is, well, we're weighing this up against, we buy this piece of technology that we can see here that does roughly what we think we need or should we develop it ourselves? And having seen that a number of times, what you then often find is that if they do decide to develop it themselves, by the time they've actually developed it, the technology has moved on. It's that classic, if you've got something that you can see is 85 % there with the technology that exists that you could buy and it's available to be bought, you probably ought to buy it rather than trying to develop it because quite often it will take so long, be so expensive and be outdated by the time you've developed it that you've already missed the boat. We see that a lot. There's always that balancing discussion of decision-making which they should do. I think often it's underestimated how difficult it is to build these things from scratch and how much the technology could have moved on, especially with the wonderful world of AI that we're currently in.
Carly Gulliver
It's definitely something I hear a lot of too. think that in particular across some industries, that's particularly ripe. So take something like InsureTech where, you know, that point you made James around, well, if we have, if we need a particular tech solution, should we buy it or should we build it? And often the answer is to buy it because of course you can get that much more agile, innovative, entrepreneurial tech solution into what can be quite an older enterprise or institution. And it's a neat way of doing that and of acquiring a talent team and plugging that into.
So we've covered a lot of ground there talking about strategic transactions with some examples of what you've been seeing and what you've been working on. We've looked at that from both a deal execution perspective and then a bit about life beyond that deal from a tech structuring perspective. And of course we touched upon some very relevant themes there on AI and things like the impact of national security and regulatory controls and things like that from both a timing and structuring perspective and looked at how tech can be very important for value creation and particularly how it can impact different sectors such as financial services. So I think that has been an amazing tour through tech transaction.
Thank you, James and Damon. I mean, any closing thoughts from you on the very massive topic of tech?
James Dawson
I thought you were going to ask us about, you know, what we'd put in a box.
Carly Gulliver
I'm coming to that.
James Dawson
Oh, I'm jumping ahead. Well, I just look forward to the next 25 years working with Damon on continuation of our successful deal flow so that we can sit here in 25 years time and have an update.
Carly Gulliver
In 25 years time there might be a complete language model built on both of you in order to do that so you don't have to...
James Dawson
And we won't reveal how old we'll both be in 25 years time, but Damon won't quite yet be ready for retirement.
Damon Rosamond-Lanzetta
I don’t know about that. I think in terms of looking forward and on tech, think there are things coming forward. There's obviously the development of AI. Where's it going next? We've got agentic AI, which is the current hot topic. There'll be the next piece of that. We've obviously got serious technological change potentially coming through with quantum computing, which has the potential to totally upend everything we know about cryptography. Cryptography, we haven't even talked about cyber security on this session, which is a huge business impact and very relevant even on acquisition. And then there's the things we just don't know about as someone developing something now, which will no doubt knock our socks off. I mean, I think that's the thing, which to me, you're saying to the C-suite, to say to anyone in this space is keep your eye out because we're not standing still, we're accelerating. One of the sort of biggest areas that AI is being used in is in software development. Yeah. It's enabling coders to do the sort of basic foundations of their coding hugely quickly using AI and really focus on what they can add value in. So we could see things accelerate and move. There's so much happening in tech that, yeah, just keep your eyes open.
Carly Gulliver
It's funny you should say that, Damon, but mean, almost on a weekly basis, I'm having calls from founders who potentially want to raise and grow their company, but they're saying to me, well, can we just show you the tech? Can we jump on and you have to see it to believe it? So to your point around new things being created all the time, I think that's absolutely true. You have to keep your eyes open and approach with curiosity.
So to come around to my final question, what item of tech would you like to put in the AG Tech time capsule?
James Dawson
So when we discussed this earlier, Damon and I were joking and saying we'd both put a Dictaphone in, but we think that that's no longer relevant technology. So I think we're not allowed that. So I think I would put my fitness tracker wearable in because I think it would be interesting to look at how sedentary I've been or not for the last few years.
Carly Gulliver
Great, Damon?
Damon Rosamond-Lanzetta
I think for me, I would probably put the Blackberry into the box. And that's because whilst it's a very whizzy piece of tech, it was the impact on my life as a young lawyer that that had.
Carly Gulliver
You're an absolute game changer by the sounds of things. I mean, I didn't take inspiration from LA law, same, and I was much more of an Ali McBill girl, both in terms of becoming a lawyer and then also my love of karaoke. But no, I think that's an excellent contribution to the tech time capsule. Well, thank you very much both. That's been great to speak with you.
Damon Rosamond-Lanzetta
Thanks, Carly.
James Dawson
Thanks.
Carly Gulliver
Thanks very much for your time.
Thanks for joining us on today's episode of Inside Tech Minds. If you enjoyed the conversation, don't forget to follow and subscribe on Apple or Spotify or even leave us a review. Thanks for listening and we'll see you next time.
