Identifying companies for M&A/investment target utilization map
Using the Augmented Reality (AR; AR glass) technology field as an example, we provide contents for discovering M&A/investing companies using PatentPia GoldenCompass. If you click on the chain(link) marks that are combined to each item in the above utilization map, the example page will open in a new window.
Identifying M&A/investing company candidates from a patent view
There are so many factors that go into the identification, review and execution of technology companies for M&A and investing companies. The most objective, and virtually the only, comparison with companies in technology is patent data.
A small to mid-sized technology company may have a good patent portfolio, but it doesn't really represent its true value in the marketplace. However, if a large/ global company with market leadership or market dominance owns/leverages the patent portfolio of the company being acquired/invested in, the i) disruptive power, ii) impact, iii) value owned/leveraged, iv) market dominance , v) bargaining power, etc., becomes incomparably higher.
Advantages of patent data
Highly objective early stage data
As patent data is related to R&D, it helps to detect technology innovations objectively at an early stage.
Proactively recognize key personnel information
For M&A/investments in technology companies, advance recognition of key research personnel is important. In M&A/investments, retention of key personnel can be reflected in the contract terms or contract price.
Contribute to price control in M&A/investments
When shortlisting or negotiating with technology companies for M&A/investments, prior awareness of a company's financial vulnerability is important for acquiring assets at a lower price. There are several important signals in patent data that indicate a company's financial vulnerability. These include i) a sharp decline in (overseas) patent applications, ii) an increase in the abandonment of annual maintenance fees for patents in possession, and iii) the setting up of security over patent rights.
In addition, a systematic and precise analysis of the patent vulnerabilities of the technology companies targeted for M&A/investments can also help to reduce the acquisition price for oneself.
Conditions of a promising company
A promising technology company is not determined by the technology itself. A technology that has no market, does not have a market, and takes a lot of time to open a market is not a promising technology in the real world.
Therefore, companies with technologies that have a market, or have the power to shape the market, and that have i) congruence, ii) complementarity/complementarity, and iii) precedence with the areas of new investments by market leaders or global companies can be said to have promising technologies.
Signals new/investing fields of market holding companies
Market leaders or global companies worry the most about their future, receive the most consulting, and spend the most on predicting and hedging future risks. As a result of this worrying, consulting, and risk prediction, market leaders or global companies execute i) M&A/investments in technology companies, ii) patent purchases (with open innovation), and iii) R&D rebalancing. Accordingly, it is necessary to identify promising companies for the future, focusing on i) fields of M&A/investing companies, ii) fields related to purchased patents, and iii) fields of surging R&D investments (= fields of surging domestic/international patent applications), which are closely related to the new investment areas of market leaders or global companies.
Falling business parts of large/global companies
Market conditions, clients' needs, and consumer preferences change all too quickly. As a result, market leaders, global companies, and conglomerates optimize their business portfolios on a constant basis. As a result, it is difficult for them to fully fund R&D in the business segments that are being rebalanced/declining investments. i) rapid decrease in domestic and patent applications, and ii) rapid decrease in self forward citations are signaled by reduced investments in R&D.
Falling business segments of large/global companies make good acquisition targets for mid-sized companies or companies from other nations with deep pockets, as there is a captive market for the business segment and there is no need to invest in (new) market development costs.