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divestment Transactions
The opposite of an 'investment', a divestment
generally refers to the disposal of a business unit by a
corporation. Tynax helps corporations divest of the IP assets
from discontinued subsidiaries or divisions. Although
divestments often involve the sale of a complete operating
business, Tynax focuses exclusively on patent and
technology-related transactions.
Typical Technology Sectors
Divestments take place across all technology sectors, however, they are
highly prevalent in the high-tec h industries where corporations
experience rapid changes in business strategy.
Typical Organizations
Although any organization can divest of non-core assets, most
of the divestment activity involves high-tech multinational
corporations.
Transaction Process
The process starts with identification of the
patents and intellectual assets to be sold. This may be the
result of a cataloging activity that maps the claims of existing
patents against the current and future requirements of the
business.
An anonymous listing is then written and posted on the Tynax
exchange. The listing is syndicated to targeted buyers and
brokers/agent representing buyers all over the world.
Upon execution of confidentiality agreements, details of the
patents and associated assets for sale are provided to buyers.
Buyers often have questions relating to licenses and other
potential encumbrances to clean title. Some buyers have
questions related to potential infringement. One of the first
questions asked by the buyer is the price. For this reason, the
sales process can be more effective when an asking price is
circulated with the listing. For larger, more complex
transactions, technical questions may be posed.
Following this question and answer process, the buyer may make a
tentative offer. If there are several interested buyers, a
bidding process may take place. Following the negotiation on
price and other terms, the preferred offer is accepted by the
seller.
The buyer then usually provides a patent purchase agreement to
the seller and commences the due diligence process. Due
diligence in this type of transaction generally focuses on
validity of the patents and ensuring the sellers title is
clean. Prior art investigations may be carried out by the buyer.
Any licenses, liens or other encumbrances need to disclosed and
discussed during the due diligence process.
After the due diligence process is complete, the closing process
involves transfer of payment in exchange for patent rights and
recording of the assignment with the patent office.
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Common Concerns |
Both buyers and sellers in a divestment involving patent rights
are often concerned that their negotiations and activities are
confidential and are not disclosed to the market. The identities
of the seller can be shielded until the NDA confidentiality
agreement is signed by the buyer and the patent numbers are
disclosed. Working through intermediaries, the identity of the
buyer can be shielded from the seller up to the point of the
closing--although this is unusual and the name of the buyer is
normally disclosed at or before execution of the NDA. In extreme
cases, anonymity can be maintained throughout the process and
the assets can be acquired by a shell company or agent acting
for an undisclosed buyer.
Many corporate sellers are highly selective about the type of
buyer they are prepared to engage with. These sellers are usually
reluctant to sell to enforcement-focused buyers. This is
particularly true of corporations that have become the target of
patent infringement suits from these buyers in the past. Often
the seller will refuse to sell to a direct competitor. The role
of the intermediary is important here in presenting the
divestment assets only to buyer-types approved by the seller.
When the concerns of the seller are known by the intermediary,
promotion of the assets can be restricted to the type of buyer
that would make a good match and fit within the seller's
guidelines.
A seller with an existing client base and an established product
line that is not being sold as part of the divestment
transaction will usually request a license back enabling
them to continue servicing their customers without the fear of a
future patent infringement suit from the buyer. |
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Key Negotiation Points |
Pricing is always a significant factor in these
negotiations, however, other issues are sometimes even more
important in finding win-win deal structures that meet the
demands of each of the parties. The scope of the license back
can be a source of much discussion. The seller wants to maximize
flexibility in the scope of the license back while the buyer
wants to restrict the scope so that it does not interfere with
their patent rights.
Where the seller is suspicious that the buyer may be
overly-zealous in enforcing the patents, the seller may wish to
incorporate a covenant into the assignment contract that
restricts the buyer from aggressive litigation and threatening
licensing activity. This may become a topic of some negotiation.
Recruitment and transfer of employees can become a discussion
point where the divestment involves more than a simple transfer
of intellectual property from buyer to seller. In many
situations, successful commercialization of the patents and
technology is dependent on a
specialist team of technologists. The transfer of product
designs, software code and other intellectual assets are
important components in some transactions. |
| Why Tynax? |
With direct access to the most active buyers, a global network of brokers
and online exchange, Tynax offers more market reach to corporate sellers
wishing to divest of patent-centric assets. By reaching international
markets and bringing more buyers into the process, Tynax is able to
maximize the prices and transaction values for its clients.
Tynax is structured to provide a discrete service to clients wishing to
operate in stealth mode. The divestment process is fast, quiet and
efficient. |
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