Early open-source software (OSS) audits: a seller’s advantage in M&A is becoming increasingly clear in today’s competitive deal-making environment. As software becomes a core asset in nearly every acquisition, the presence of OSS within a target company’s codebase introduces both opportunities and risks. By conducting open-source software audits before formal due diligence, sellers can reduce uncertainty, improve transparency, and ultimately strengthen their position in negotiations.
The Role of Open-Source in M&A Transactions
Modern companies rely heavily on open-source software to accelerate innovation, cut costs, and stay competitive. However, OSS also carries legal, security, and compliance obligations. If left unchecked, these issues can emerge during M&A due diligence and create friction between buyers and sellers. Early audits help identify these concerns in advance, ensuring that they do not derail discussions when valuation and timelines are most sensitive.
Why Early OSS Audits Matter
Waiting until due diligence to review open-source software can be risky. At that stage, buyers are looking for reasons to negotiate down the price or extend the process. Discovering unlicensed dependencies, incompatible licenses, or unresolved vulnerabilities can raise red flags. In contrast, companies that conduct OSS audits early arrive at the table prepared. They can demonstrate awareness of potential risks, outline remediation steps, and avoid last-minute surprises that reduce buyer confidence.
Transparency as a Negotiation Advantage
Buyers value predictability and trust. When a seller provides a clear Software Bill of Materials (SBOM) and a documented audit of OSS components, it signals professionalism and accountability. This transparency not only reduces legal and technical uncertainty but also accelerates the transaction process. In many cases, it can even justify a stronger valuation by showing that risks have been proactively managed.
Strengthening the Seller’s Position
A seller who performs an open-source software audit before due diligence enters negotiations from a position of strength. Instead of being reactive to buyer concerns, they can present a clean, verifiable OSS compliance report. This proactive approach allows the conversation to focus on growth potential and strategic fit, rather than being bogged down by compliance questions. In a competitive M&A environment, this preparation can make the difference between closing a deal smoothly and facing costly delays.
In Short…
Building confidence for buyers through early OSS audits is not just a technical exercise; it is a strategic move. By identifying risks upfront, providing transparency, and aligning with buyer expectations, companies can streamline negotiations and protect their valuation. In today’s fast-moving M&A landscape, early open-source software audits are becoming a hallmark of well-prepared sellers.
Are you preparing for an acquisition or investment round? At Fossity, we help companies audit their open-source software early, reduce risk, and build trust with buyers. Contact us today to strengthen your M&A readiness.