IP Growing in Importance to M&A Transactions

The only way MergerMarket’s latest survey on intellectual property and M&A transactions could be a better plug for Intangible Insights is if they had surveyed middle market internet companies rather than ”50 senior executives and private equity practitioners” (not likely to be internet companies) and published the same results.  M&A Insights: Spotlight on Intellectual Property Rights shows the growing importance of IP in the knowledge economy. It also shows that while executives acknowledge the importance of IP in a transaction, it doesn’t receive the attention it should.

The entire report is well worth reading, but a few key highlights follow (another link to the report is on our Research page):

·         53% of respondents believe IP assets are more important to M&A transactions today than they were 10 years ago (11% of respondents believe the importance of IP assets has decreased over this time).

·         52% of respondents expect the importance of IP assets to increase over the next five years. Two corporate respondents cite the increasingly “data centric world” and “greater access to information online” as key drivers (our emphasis).

·         Corporate respondents are far more likely to value IP assets explicitly during every M&A transaction. 32% always perform explicit IP valuations, compared to 12% of private equity respondents.

·         Several respondents from both the corporate executives and private equity practitioner groups point out that IP assets are particularly relevant to the information based IT sector (our emphasis).

·         84% of corporate respondents and 72% of private equity respondents view IP portfolios as equally important or more important than other assets when identifying a target.

·        52% of corporate respondents and 30% of private equity practitioners believe IP due diligence has a significant impact on the economic terms of a deal.

·         58% of corporate respondents cited insufficient time as a major obstacle to conducting comprehensive and careful due diligence, compared to 30% of private equity respondents.

·         52% of respondents believe insufficient due diligence is often to blame when an acquirer fails to secure rights to a target’s IP assets.

Print This Email This

Filed Under Intellectual Property, Merger & Acquisitions