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March 15, 2009 (Vol. 29, No. 6)

Economic Crisis Provides a Potential Boost to IP Portfolio

Strategy Could Allow Surviving Firms to Increase Their Value

  • M&A Activity

    In another scenario, the company might consider acquiring additional IP to make itself a target for an M&A deal. Recently, the lack of capital has resulted in investment bankers aggressively promoting acquisitions of companies that lack the capital to survive for long. Large companies have not radically changed their strategies, however, despite depressed valuations as evidenced by a lack of increase in the M&A activity. A smaller company might consider strategically building an IP portfolio that might make it an attractive target.

    For example, a diagnostic company focusing on detection and quantitation of a particular analyte using particular bodily fluids might consider acquiring IP that allows it to analyze similar analytes in related bodily fluids. Such a strategic move will provide a competitive advantage by expanding the services that could be provided, cover alternative diagnostics, and reduce likely IP disputes. All of these could make the company a better target for M&A.

    The most economical way to monitor the buying opportunities is for in-house counsel at the companies to take the lead. Additional resources could be provided by law firms. In addition, there are public auctions, predissolution sales, as well as intermediary players that can help monitor available assets and broker the deals.

    The current economic condition is extremely difficult, but it also represents  considerable opportunities. Companies should seize this opportunity to build an IP portfolio that not only builds value and saves considerable time and money in R&D and legal costs, but might also result in delivering better patient care. The companies that act and make the right decisions will likely weather the recession and emerge strong. 

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