Open source software (OSS) has become a cornerstone of modern innovation. By offering prebuilt, proven, and freely available components, OSS accelerates development cycles, reduces costs, and enables organizations to deliver products to market faster. In fact, OSS is now estimated to make up 80% of proprietary applications. According to Harvard Business School, recreating the open source software that companies depend on would cost an estimated $8.8 trillion globally.
With such massive reliance, it is clear OSS brings tremendous value. But it also introduces risk, especially in high stakes situations like mergers and acquisitions (M&A). Software that looks like a strength on the surface may contain hidden vulnerabilities, license compliance issues, or security gaps. If left undiscovered, these risks can stall due diligence, lower valuations, or even derail deals altogether.
This whitepaper explores the dual nature of OSS in the context of M&A, its rewards and its risks, and provides practical guidance for managing those risks effectively.
What’s Inside:
- The Reward and Risk of OSS
- 5 Ways OSS Risk Applies to M&A
- Navigating the Technical Due Diligence Review Process
- The Role of SBOMs (Software Bills of Materials)
- OSS Management with Revenera SCA Solutions
Don’t let open source risk become a roadblock. Read the whitepaper to learn how to navigate OSS challenges in M&A with confidence.
Who will find this whitepaper valuable?
This whitepaper is relevant for anyone involved in planning, evaluating, or supporting mergers and acquisitions where software plays a role. Whether you are making strategic decisions, advising on legal and compliance matters, managing technology and security, or guiding product development, you will find practical insights here. It highlights how open source software can impact transactions, what to watch for in due diligence, and how proactive management can accelerate deals and protect long-term value.
Frequently Asked Questions
- Why is open source software considered risky in mergers and acquisitions?
Open source software is often governed by licenses that create legal obligations and may contain security vulnerabilities. In an M&A deal, undiscovered issues can impact valuation, introduce liability, or delay the due diligence process. Managing these risks early ensures smoother negotiations and protects long-term deal value. - What is a Software Bill of Materials (SBOM) and why is it important in due diligence?
A Software Bill of Materials (SBOM) is a detailed inventory of all software components, including open source libraries. During M&A, it provides transparency into what code is being used, how it is licensed, and whether it poses security risks. SBOMs give both buyers and sellers confidence that potential issues have been identified and addressed. - How does Software Composition Analysis (SCA) support M&A transactions?
Software Composition Analysis (SCA) scans codebases to identify open source components, licensing terms, and known vulnerabilities. This helps buyers understand the risk profile of the software they are acquiring and helps sellers demonstrate compliance. Using SCA tools speeds up technical due diligence and reduces the chance of costly surprises later. - Who in an organization is responsible for managing open source software risk?
Responsibility for open source software risk typically spans multiple teams. Legal and compliance teams handle licensing, security teams track vulnerabilities, and engineering teams manage component usage. In M&A, corporate development and product leaders also play a role to ensure risks are visible and factored into the transaction. - Is Software Composition Analysis useful outside of M&A?
Yes. Even if a company is not pursuing M&A, SCA helps maintain secure, compliant, and reliable software. By continuously monitoring open source components, organizations can prevent vulnerabilities, ensure license compliance, and build strong governance practices. If a deal does occur in the future, this preparation makes due diligence much faster and easier.
