USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Vinita Sithapathy, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters
1. Market Trends 1.1 Technology M&A Market
2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company In the USA, states regulate the formation and opera- tion of business entities in their respective jurisdic- tions. Delaware is the most popular state for start-ups in the USA, as it offers various advantages that distin- guish it from other states. These include: • access to the Delaware Court of Chancery, which specialises in business law and provides a large body of precedent; and • incorporation or formation at minimal cost and without minimum capital requirements. 2.2 Type of Entity Start-ups are most commonly formed as: • sole proprietorships; • limited liability companies (LLCs); • general and limited partnerships; and • corporations, which can elect to be treated for US federal income tax purposes as either “C-Corpo- rations” (the most common) or “S-Corporations”, each with different eligibility requirements. Corporations and LLCs are the main entity types used in the USA, and shareholders of a corporation or members of an LLC will generally not be held lia- ble for the liabilities of the respective entity. Although Delaware law discourages it, Delaware courts and courts in other jurisdictions may, under certain lim- ited circumstances (eg, fraud or violations of criminal law), disregard the separate legal status of an entity and allow a plaintiff to “pierce the corporate veil” and recover directly from shareholders or members. 2.3 Early-Stage Financing Commonly referred to as the pre-seed and seed rounds, early-stage financing for start-ups typically comes from a wide range of sources, including: • family and friends; • angel investors; • government-sponsored funds;
While showing signs of improvement throughout 2025, the US M&A market overall continues to contend with headwinds, including regulatory pressures, evolving tariff policies, international trade tensions and geopo- litical unrest. Technology M&A has not been immune to these headwinds; however, it has fared better than other sectors, and sentiment for the technology sec- tor moving into 2026 is optimistic, albeit tempered by caution due to ongoing macroeconomic and regula- tory uncertainties. As of Q3 2025, technology M&A led all sectors, accounting for 30% of North American deal volume. Some recent economic and political developments have provided reasons for optimism that technology M&A deal flow value will continue its steady incline going into 2026, with a more general recovery beyond. The Federal Reserve’s decision to cut interest rates was well received by the US market, and market par- ticipants continue to expect a wave of consolidations. The current US administration seeks to establish and reinforce US technological sovereignty. This focus has fuelled heightened investor interest in sectors such as artificial intelligence (AI), national security, defence technology, cryptocurrency and financial technology – all of which align with the administration’s core policy objectives. 1.2 Key Trends AI remains the dominant driver for technology M&A heading into 2026. Businesses are actively compet- ing to secure the infrastructure needed to support AI, including high-performance computing, advanced networking capabilities and robust, scalable power sources. Telecommunications companies are invest- ing heavily in fibre networks, 5G backhaul and related infrastructure to meet AI’s surging bandwidth require- ments. Major cloud service providers are pursuing vertical integration by expanding their own data centre assets. Beyond these physical assets, organisations also seek technology that underpins AI model devel- opment to accelerate the roll-out of AI solutions and to maintain competitive positioning in core AI tech- nologies.
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