OpenLogic sells open source audit service for M&As

OpenLogic, which provides support and auditing services for open source software, announced a new offering on Monday aimed at customers in the process of buying other companies.

When bidding for a company takeover, the bidding company requires a full catalogue of licences, liabilities and limitations that makes up the target company's assets. OpenLogic's new service aims to simplify that process by analysing the code directly and producing a suitable full audit for those companies.

The M&A Open Source Audit Service provides a scan of the acquisition target's systems, detects the open source software and licences in use and generates a report. Customers also receive a certification report that outlines what the target company has done to make sure it is in compliance with open source licences and copyrights. In addition, OpenLogic will provide "limited indemnification" - financial coverage in case of an intellectual property lawsuit - for the code it tests.

The new offering comes at a seemingly opportune time. Analysts are predicting a significant rise in merger and acquisition activity during this year and next. Monday brought one of the latest deals, with Pegasystems' plans to purchase CRM (customer relationship management) vendor Chordiant.

But observers took measured views of OpenLogic's announcement.

"Open source auditing in general is a fine idea, but not because it's open source," said Redmonk analyst Stephen O'Grady. "Pre-transaction auditing is simply good practice, period. Is it helpful to know what open source is being used, and where? Certainly. Just as it's good to know what proprietary software you're using, and where."

Code vetting and other services from companies like OpenLogic, Black Duck and Palamida are indeed an important part of pre-acquisition or merger planning, 451 Group analyst Jay Lyman said via email.

"While I typically downplay the importance and impact of many intellectual property issues when it comes to enterprise IT, I think this is one area where there is actually a good degree of awareness given high-profile lawsuits, settlements and developments," Lyman said. "In addition, I believe acquisitions involving open source software are typically strategic, rather than based on customer or revenue grabs, so the technology and the code becomes an even more critical piece of a potential acquisition."