Acquiring innovation is not easy.
Most companies and startups innovate through the development of intellectual property, research and development or the acquisition of IP through mergers and acquisitions.
Companies can target specific IP to help bolster their business or even avoid patent litigation. Such acquisitions happen at industry conferences, through submission portals or internal evaluations.
Tech and code buyers discover IP they might wish to buy through market research, trade conferences and from internal business units. Companies then evaluate leads and identify the best potential acquisitions.
The company either has internal experts on the subject-matter at hand so as to properly evaluate the deal. To be sure, valuing a startup’s IP is not easy.
Sellers often have a predetermined price at which they will part with their IP. This is not always the market value. So, then, negotiations commence. Moreover, sellers might be split internally over the valuation of the IP or whether it should be sold at all. On the flip side, acquirers might also be split within their organization over whether the IP can be created internally.
Exit strategies, or the final nature of the deal, is often determined at the start of the deal, such as if the deal will end in a license or an outright purchase. Dealmakers can then better negotiate the provisions.
The purchasing companies lays claims to all of the equity of the firm being sold in a traditional acquisition, such as employees, customers, processes, technology, balance sheet and the hard assets of the firm like cash, debt, equipment, liabilities, intellectual property like patents, trademarks, copyright and more.
Negotiations, however, often fall through. Some contend that as many as 50% of acquisitions fail. The IP sales process includes an audit, expert appraisals and paperwork.
A growing sect of technologists that blockchain technology might provide a solution to making the currently frustrating M&A process similar–potentially bringing peace of mind to a new generation of startup owners.
“Blockchain can cut down on the time startups and companies spend researching possible IP acquisitions by providing an immutable ledger that brings transparency to a historically murky niche,” says Amir Kaltak, founder and CEO of LEXIT, a company that provides blockchain solutions for founders.
“No longer will companies have to rely on internal expertise alone to determine the value of an IP,” the M&A veteran said. “Participants united by a tokenized game theory model can rely on third party assessors, who assist both selling and acquiring startups understand the market value of their IP.”
I guess chalk it up as another one for blockchain