"Be quick and nimble in this constantly changing environment. As with any new technology, the legal framework and general "rules of the road" are either still being developed or have not yet been considered by the appropriate regulating organizations. Players must take into account their tolerance for regulatory and other comparable risk in an unreliable legal environment."
– Kristian Herrmann, Partner, M&A
"Act early and thoughtfully on insurance issues. For
Web3-focused businesses, the insurance market is still developing
and can be quite volatile. Certain policies that might be
accessible on the open market may not be offered or may be
excessively expensive to purchase. To learn more about (i) the
target's current insurance program, (ii) expectations for the
potential breadth of, or gaps in, coverage, and (iii) anticipated
costs, talk to your broker or other consultants as early in the
process as possible."
– Chris Ahn, Partner, M&A
"Know what rights have been granted to third parties with
respect to any virtual real estate. Virtual real estate is owned
through NFTs, similar to other metaverse assets, as opposed to
notarized deeds recorded in a property's local land records.
Holding a distinct NFT makes chain of title and ownership concerns
simpler, but it's still vital to understand what agreements and
rights may have been granted to third parties regarding any virtual
real estate, as well as the method by which those rights were
granted. In addition, consider the blockchain environment in which
the assets are held and any limitation imposed by that environment
on the transferability of the asset."
- Robert Shmalo, Partner, Real Estate
"Understand the nature of the rights and licenses that the
target has in NFTs and the connected content by carefully
identifying and evaluating the terms and conditions governing each
NFT's issuance, distribution, sale, or transfer. A wide variety
of approaches have been taken in the market. Whether an NFT owner
obtains intellectual property ownership of, or receives a license
to, the content associated with the NFT – and, if a license
is obtained, whether it is exclusive and authorizes commercial
usage – can determine the value and utility of an NFT. When
doing due diligence, it's also crucial to consider each
NFT's provenance and if the original minter had all the
intellectual property rights necessary to issue it."
– Wai Choy, Partner, Technology, Media & Telecommunications
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.