How to Use IP in the M&A Process

In addition to intellectual property being one of the due diligence items reviewed during the M&A process, intellectual property information can also be used to find, analyze, and negotiate agreements. The ” How to Use IP in the M&A Process” figure shows at a high level the M&A process steps, the information that’s generated during each of those steps, and finally the intellectual property tools that can be brought to bear to help make a fast, high-quality, and sticky decision.

During the identifying targets phase of the M&A process the objective is to create a list of high-quality candidates. This can be done using intellectual property by taking the patents from all companies in the business segment of interest, and from that combined list of patents, create a high level landscape map of all companies’ art. Each company’s art is color-coded including those patents of the acquiring company. Candidate companies can be added to the list based on which of the industry participants occupy landscape map positions similar to the acquiring company, as well as those that occupy business areas on the landscape map of interest to the acquiring company.

A similar analysis can be done by creating radar graphs where each axis represents a patent classification. The short list of companies’ patent holdings can be mapped on this chart to show the degree of overlap and distinction in various candidate company’s business and technical competencies.

Once a candidate list of companies has been obtained the next step in the M&A process is to evaluate and analyze the top candidates. Utilizing patent databases can again be helpful. Using the tools shown in the above section, comparing patent portfolios is most helpful in assessing the target companies technical and business strengths and weaknesses.