Open Source License Risks in M&A: Navigating Copyleft & AGPL Exposures
Why a single AGPL library can compromise proprietary source code in tech acquisitions, and how to spot license risks before closing.
Dealigence IP Compliance Practice
Open Source & IP Audit
The Hidden IP Hazard in Proprietary Software
When purchasing a tech company, buyers assume they are acquiring exclusive ownership of proprietary software assets. However, improper use of open-source software (OSS) with strong "copyleft" licenses can legally force a target company to open-source its entire codebase.
Understanding Permissive vs. Copyleft Licenses
- Permissive Licenses (MIT, Apache 2.0, BSD): Safe for commercial use. Allow target companies to incorporate code into proprietary applications without obligation.
- Weak Copyleft (LGPL, MPL): Requires modification to the library itself to be disclosed, but generally isolates proprietary code.
- Strong Copyleft (GPL v2/v3, AGPL): Requires any derivative work—or cloud network access—to publish all source code under an open-source license.
How Dealigence Automates OSS Auditing
Dealigence automatically parses dependency trees, lockfiles, and direct import statements to categorize licenses across permissiveness levels. Dealmakers receive immediate flags whenever high-risk licenses like AGPL or SSPL interact with core business logic.
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