Our Approach To Sell-Side M&A Engagements: We start by carefully analyzing the universe of
potential acquirors to select a short list of companies for whom acquisition of our client’s technology
and IP would represent “strategic value” in the form of significant competitive advantage. Concurrently,
we develop an Opportunity Summary brochure for each of the prospective acquirors describing our
client’s technology and IP and explaining why it represents strategic value for that particular company.
We then use the Summary to initiate discussions regarding a potential financial transaction with the
relevant corporate development executives and IP professionals within our network.
One approach we have used is to create an initial strategic partner relationship involving an exclusive
field-of-use licensing arrangement coupled with a minority equity investment that can lead to an
outright acquisition of the company. The value of the IP -- including patents, know-how, copyrighted
software and brand equity -- becomes the foundation of the discussion, together with other applicable
intellectual capital such as engineering staff, and customer and supply chain relationships. Our
objective is to establish and leverage the IP value up front, which, when properly analyzed, is often
worth far more than the accounting value of the business.
Our Approach To IP-Intensive Technology Spin-Outs: We work with trusted third parties that provide
focused capital formation and operational management services, to create a Technology Asset
Cultivation & Licensing Company (TACL). The TACL is a new corporate spin-out model for non-core
technologies and associated IP that have become “stranded” within a large company. Working
closely with the originating company, we identify perishable technology assets whose value will be
eroded if left to stagnate but which can be significantly enhanced through a combination of technology
completion and IP enhancement. The TACL differs from previous models in that the technology and
IP is spun out into a development company that targets a liquidity exit in 12–24 months, during which
time the asset is improved, extended, groomed, and packaged for one of a variety of exits, including
sale to a corporate buyer for which it is core, creation of an independent operating company, creation
of an exclusive field-of-use IP licensing company, etc. The TACL model is much more capital efficient
than conventional spin-out models because it focuses the available financial resources and human
capital on bringing the technology to a commercial stage and improving the value of the associated
capital IP, rather than building operating company infrastructure which may be discarded when the exit
is acquisition by another operating company.
In both of these cases our approach significantly leverages our breadth of contacts among operating
technology companies, as well as our relationships with IP professionals that we have developed
over decades of participation in the IP community.
Typically those involved in corporate mergers, acquisitions, and divestitures
pay little attention to the embedded value of the relevant IP, preferring
instead to pursue a path toward transaction value based on historical
financial data and economic rules-of-thumb built around traditional
accounting metrics such as EBITDA, P/E multiples and free cash
flow. With over 70% of the value of NASDAQ represented by
intangible assets, IP should be a much more important
factor in an entity’s acquisition value. For acquisition
targets, IP, properly considered, can be leveraged
to achieve a better result. For acquirors,
consideration of the target’s IP can
close a price gap that would
otherwise kill the deal.
|Service Profile / IP-Driven M&A
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