Data-Driven Decisions in Mergers & Acquisitions. Can patent information provide value for acquirers?

Abstract

Rapid technology development, consolidation of industries, increased competition and changing customer needs, create new challenges for today's organisations. Faced with new requirements these organisations rapidly need to access and obtain new capabilities, and many organisations are therefore increasingly turning to mergers or acquisitions, obtaining external assets and competencies. Yet, studies show that failure rates of merger and acquisition activities are tremendous, ranging between 70-90%. Research suggests that patent information has many applications and can assist an organisation in multiple ways. Hence, the purpose of this study was to further understand if patent information can be valuable in merger and acquisition processes. The study consisted of a literature review regarding mergers and acquisitions, patents and patent-based decision making, analysing the viability of patent data as a source for information. Furthermore, to obtain a deeper understanding of the practical feasibility, interviews were performed with individuals having IP, legal, technological, business and/or financial knowledge. In addition, a survey was constructed combining information discovered by literature and interviews, further validating the results. Finally, an analysis was conducted on gathered information to elaborate on the complexity of the usage of patent information in mergers and acquisitions. The main findings of this study were that diverse types of patent analysis seem to be needed in different stages of a merger or acquisition, creating a requirement to view patents from various perspectives, such as a risk, support or a strategic resource. The results of this study furthermore indicate that patent information today mostly is used in the latter part of the process. However, depending on the motives and the situation, it should also be beneficial to perform patent analysis in the early stages of a merger or acquisition. Nevertheless, the choice of using patent information should be based on knowledge and awareness, and if applied, results indicate that patent information can be valuable. Additionally, the study found that the usage of patent information in merger and acquisition activities may be impacted by other aspects such as culture, strategies, communication and the understanding of intellectual property. Something organisations may want to consider if they wish to realise the full value patents could hold for mergers and acquisitions.