Real Results, Real Clients

The Challenge

When one of Toronto's hottest AI startups got an acquisition offer, the founders were thrilled - until they realized what they were up against. The buyer wanted to close in 45 days (which is insanely tight for a deal this size), and as we dug into their corporate structure, we found some serious issues that could've torpedoed the whole thing.

Three former contractors claimed they owned portions of the core IP. The company had raised money from angel investors using convertible notes that weren't properly documented. And to top it off, there were verbal agreements with early employees that contradicted what was in writing. It was a mess.

The acquiring company's due diligence team was already asking tough questions, and our client was panicking. They'd worked for six years to build this company, and everything was on the line.

Our Approach

We knew we had to move fast but couldn't cut corners. First priority was the IP situation - we brought in our IP specialist who spent three days reviewing every contract, email, and work-for-hire agreement. Turned out one contractor actually did have a legitimate claim (they'd built a key algorithm before signing proper paperwork). We negotiated a buyout with them within a week.

For the other two contractors, we gathered evidence showing their work was derivative and that they'd signed NDAs that covered the IP transfer. We drafted comprehensive settlement agreements just to be safe - paying them a small amount to sign releases. Cost the client $85K total, but it was way cheaper than risking the deal.

Next up was cleaning up the cap table. We worked with the company's accountant to properly document all the convertible notes, got updated signatures from all investors, and created a clear ownership structure. This took another week of late nights, but when the buyer's lawyers reviewed it, they had no complaints.

The negotiation phase was intense. The buyer initially offered $39M with aggressive clawback provisions and only 6-month retention packages. We pushed back hard on the earnout terms (they were basically impossible to hit), negotiated 18-month retention packages for key employees, and restructured the deal to give founders more upfront cash. Went through 14 drafts of the purchase agreement.

The Results

We closed the deal in 42 days - three days ahead of schedule. All 23 employees got 18-month retention packages with acceleration clauses. The founders walked away with significantly more than the initial offer, and the earnout terms were actually achievable.

The buyer's legal team actually sent us a note afterwards saying our documentation was some of the cleanest they'd seen in a startup acquisition. That felt pretty good.

The Challenge

Our client, a mid-sized software company, had spent years developing and patenting a unique algorithm for data compression. Then a competitor launched a product that looked suspiciously similar. When our client reached out to discuss licensing, the competitor basically laughed them off and said "prove it."

The problem was proving infringement on a software patent isn't straightforward. The competitor had made just enough changes to their code that it wasn't a slam-dunk case. Plus, they had deeper pockets and weren't afraid to drag this out.

Our Approach

We brought in technical experts to do a deep analysis of both codebases. Took three months, but we found that the competitor's algorithm used the exact same innovative approach - just with different variable names and some restructured functions. The core logic was identical.

Instead of going straight to court (which would've cost $500K+ and taken years), we prepared an airtight demand letter with our expert analysis attached. We made it crystal clear we were ready to litigate and had the evidence to win. We also pointed out that their potential damages were growing every day they continued selling the infringing product.

We proposed a licensing deal with reasonable terms, giving them a face-saving way out. Behind the scenes, we were ready to file if they didn't respond seriously.

The Results

They settled. Paid $2.3M for past infringement plus agreed to ongoing royalties of 8% on relevant product sales. No admission of wrongdoing (they needed that for their investors), but they stopped using the infringing algorithm and licensed our client's patent properly.

Total cost to our client was under $100K - way less than litigation would've been, and they got paid within six months instead of waiting years for a court judgment.