Intellectual Property & Merger and Acquisitions
Just as you have a business/sales plan in place ahead of a financial year, having an intellectual property strategy that reflects the longer-term objectives of the company is also crucial.
In this context, it is important to understand that how a formal intellectual property protection /strategy comes in to play a critical role during a very widely and increasingly popular type of business transaction i.e. mergers and acquisitions (M&A’s).
Much recently, we have heard of many M&A’s by larger companies. #Apple acquired 24 companies, #Facebook Whatsapp acquisition was struck for more than 19B US$, #Google acquired Bitspin and Nest Labs while #Microsoft closed Nokia acquisition deal for a whopping amount. In healthcare sector, Zimmer Holdings’ $13.35 billion acquisition of rival orthopaedic products maker Biomet and the agreement between Novartis and GlaxoSmithKline to trade more than $20 billion worth of assets, made it to headlines.
About Merger and Acquisitions
It is a proven fact that M&A’s give a much desired thrust to the economy as it lets businesses grow faster, bigger and more globally competitive.
Other Benefits of mergers and acquisitions, in general, include the following:
- Helps acquiring company to advance its plans for internal R&D and product development efforts
- Brings in the required resources and funds for execution of aforementioned plans and more
- Such collaboration also means improvements in the products and services offered to the customers
Considering that and more, the value of worldwide mergers and acquisitions deals shot up and reached $1 trillion mark. Such a quick spurt was witnessed only for the third time since records began in 1980.
Coming to the understanding that how companies identify potential targets for acquisitions and vice versa. In technology-driven mergers, again IP has a major role to play before any M&A deal is struck. It is important that due diligence is done around a company’s patent portfolio to identify whether or not this would be beneficial. Many more considerations are there but for now let us just focus on patents.
There are specialist firms that provide services such as Patent Portfolio Due Diligence and Risk Assessment for devising reports that helps one to identify potential targets and assess a company’s patent portfolio –
- Which patents a company currently owns?
- Are these patents still active?
- Are these patents covering the key geographic markets you are targeting etc.
These services also help in ascertaining the associated risks such as-
- Which patents have been most often associated with patent infringement litigation
- Identify if an acquisition target’s patents are encumbered by FRAND licensing obligations, which can limit your ability to control the market and dictate licensing terms and
- Identify the competitors that may attempt to block product development through patent litigation.
So in case, you’re a small innovative company that has plans to sell or seek financing from an angel investor or some large acquirer in the long term, try to implement a formal intellectual property protection program at the earliest. Every angel investor or large acquirer will definitely demand a more formal IP protection program before getting involved.