At the present time, Russia represents the largest Internet market in Europe, and the sixth largest in the world. With more than 85 million online users, it is still a massively growing market, where, most notably, the average online segment investment deal size is $ 21.4 million (compared to a world average of $10.2 million), and the most common deal size is $ 1.9 million.

As figures and activity grew, the risks connected to these projects increased, and the rules governing them became much more complex.

Today, mergers and acquisitions – including, in many cases, those going through hostile situations – in the Russian IT sector are as much of a reality as those happening in the mid ‘90s in commercial real estate, heavy industries and natural resources areas.

Most of the Internet’s new entrepreneurs, start-up founders and project developers are so dedicated to their work that they simply do not have the time, or the opportunity, to take care, in a timely manner, of elementary judicial procedures directly related to the future of their projects.

Hence, focus of a legal advice activity should result in avoiding low quality in the initial project’s legal documentation; weak intellectual property; code and brand protection; unfair deals with investors and delayed contact with lawyers in case of corporate legal emergency.

What do we recommend?

1. Due diligence of a project since the very early stages of its development, in order to identify and fix any possible mistake from the very beginning.
2. Maintaining close contact with a strong team of lawyers and contacting them immediately in the following cases:

• Setting up the project’s corporate and legal structure and engaging with investors. Most investors have a strong legal team that ensures the presence in their contracts of clauses allowing them to remove the owner of the project, should the investors not feel comfortable to continue working together, and thus gaining sole ownership of the project. Without proper legal advice, the project’s owner may not be able to notice, analyse and consider the risks mentioned above, which can lead to the full loss of ownership of the project.
• The partnership structure is showing signs of conflict between the partners: in these cases, acting in a timely manner and applying for professional judicial help are key to an easier and cheaper resolution of the problem
• A corporate conflict is taken to court

With 18 years of experience in mergers and acquisitions, MGAP is one of the leading local media and IT law firms, and their Intellectual Property litigation team is among the best in the country. Their expertise lies in building legal backgrounds for projects and protecting intellectual property.