Patent analysis can also provide information on management style. Utilizing patent citation trees, each of the target company’s propensities to invest in work to create a sustained advantaged position can be seen. Those companies with patent fences are much more likely to achieve high-performance, high price solutions in the marketplace over longer periods of time. More detailed landscape maps are also helpful at this stage. They are constructed just of the art from the parent and target companies involved to show a close up view where areas of synergy and differentiation exists. Plotting each target candidates’ patent publication record over time also shows whether they have been sustaining investment in new products and services. Corporate financial records and SEC information on R&D can be used to see a change in investment in R&D. However, weakness in new business investment can be hidden by diverting R&D resources into tech service and customer support efforts, hiding the fact that the company is in fact reducing their commitment to the future. Using patent pattern helps uncover such “prepare for sale antics” in companies wishing to be acquired. When this is found, caution should be exercised in purchasing the target.
During the due diligence phase of the M&A process, patent databases can be used to identify by name significant inventors of the company. These inventors may be crucial to the merger and their ability to continue to innovate and/or pass on know-how is a crucial negotiation factor. Likewise if a company has a strong patent committee those resources have deep knowledge of the company’s technical, business, and market insights, its members are critical to retain after consummation of the merger or acquisition deal.
The checklist of items for competitive intelligence to assess during M&A evaluations is shown in the “Typical Factors Impacting M&A Value” figure.