Analyzing the Impact of Patents in M&A Activities
Jul 12, 2019
The global M&A market continued its growth trend in 2018 with announced transaction volumes reaching $4.1 trillion, according to a JP Morgan report. In the present technology-driven global economy, the strength of a company’s intellectual assets has a far-reaching impact on the value of a corporate transaction.
Intellectual property is among the most valuable assets for a business. In recent times, M&A activities have been driven in large part with the objective of gaining access to the target company’s intellectual assets.
A business’ brand value along with its product portfolio and intellectual assets are some of the key aspects that impact the eventual value of an M&A transaction.Typically in an M&A scenario, an assessment is done on how well the target company’s IP portfolio complements that of the acquiring company. Similarly in the case of large company mergers, the combined technology and IP assets are compared against those of other sectoral competitors. From an IP perspective, the combined patent portfolio should provide the merged entity with the ability to introduce new products, and afford them enhanced patent coverage both in terms of technology and geographical jurisdictions. Given the above, how does one ensure that proper IP due diligence is performed such that businesses get the optimum ROI post the transaction? Relecura’s advanced analytics platform provides a systematic and effective way to realize the following objectives relevant to an M&A scenario. Some of the key tasks to be performed are as follows.
- Analyze the global technology landscape to scout for suitable acquisition targets or partners.
- Assess the portfolios of the shortlisted target companies to determine their value addition to your company portfolio.
- Perform a comprehensive teardown and side-by-side comparison of portfolios, to determine pockets of value in the respective portfolios.
- Estimate the portfolio quality of the potential targets.
- Discover the key patents in the target portfolio.
Case Study - Why everyone wants Nuance?
In the video, we use patent data to address the hitherto hypothetical question of who stands to gain the most IP-wise, by acquiring Nuance. Nuance Communications, as one of the pioneers of speech recognition technology, has changed the way people interact with the devices, systems, and applications that surround them. Nuance was founded in 1994 as a spin-off of SRI International’s Speech Technology and Research (STAR) Laboratory. The company has developed sophisticated voice systems and has absorbed a number of companies working on voice recognition capabilities over a period of two decades. It is now the owner of an enviable patent portfolio related to advanced speech recognition technologies. It is Nuance’s strong technology portfolio that has made it a perennial acquisition target. In 2010, news surfaced that Apple was planning to purchase Nuance. Steve Wozniak mistakenly claimed Apple had already acquired the company. Apple clarified its stance but assumptions were made of a deal between the two companies. The potential acquisition was estimated to be worth USD 7 billion. In April 2010 Apple instead purchased Siri, the maker of voice control software and popular app for the iPhone. Amidst all the speculations was buried the fact that Siri’s voice assistant, relied on Nuance technology. In 2013, Nuance confirmed that it was their technology powering Siri’s voice recognition capabilities. In 2014, the reports of Samsung’s plan to purchase Nuance triggered market reaction and speculation around the impact of Nuance’s acquisition on the speech technology market, especially on the iPhone ecosystem. In the video, we indicate how the patent portfolios of multiple potential acquirers can be mapped across the key speech recognition categories of Nuance's portfolio and compared. This addresses the question that we posed earlier and hints at which companies stand to gain the most IP-wise by acquiring Nuance and its patent assets You can also get IP insights related to other large technology mergers and acquisitions covered elsewhere on the Relecura Blog by clicking through the links below.- UTC and Raytheon: IP Analysis of the Mega Merger
- Boston Scientific Boosts Patent Portfolio with BTG Acquisition
- IBM’s Acquisition of Red Hat – The Patent Perspective
- Nokia’s Merger with Alcatel-Lucent – IP Impact
- InterDigital and Technicolor – How well do their Patent Portfolios combine?
- Intel-Mobileye – IP Anatomy of the Acquisition
