Quick Tips

Achieving Sucess

Over the years, Greg Coticchia, now CEO of online billing provider eBillingHub, and Stephan Zoder, a Sr. Product Manager currently with IBM’s software group, have worked both sides of deals involving the acquisition of technology licenses, reseller agreements, corporate acquisitions, and other transactions in which proprietary technologies changed hands.  At a recent Product Strategy Network Roundtable, they discussed the nuts and bolts of acquiring intellectual properties.  In this article summarizing that Roundtable, ‘i.p.’ refers interchangeably to technology, patents, and proprietary products which can be acquired in various ways including licenses, reseller agreements, and company acquisitions.

• Know who’s on top.  In an acquisition, there are more ways to go wrong than right.  Among them are cultural risks.  Most company acquisitions are not of equal size.  You’ll often hear about ‘Mergers of Equals.’  But don’t believe it.  Someone always wins.  The question is: how well can this consolidated group operate?
• Anticipate problems.  When you have two separate organizations who are going to market together, you’re going to have pricing issues, promotion issues, product definition issues.  Who’s going to sell it?  How much are they going to make?  How many resources is this going to get versus your regular products?  You’ve got to sell the answers internally to people in both organizations.
• Chat ‘em up.  If you’re the acquiring company, talk to the people in development, customer support, professional support, documentation, sales, and product management at the company from whom the I.P. was acquired.  Get them involved in as quickly as possible so you can vet out how is it going to fit, how you’re going to integrate it, how you’re going to make it work and get it to marketplace quickly.
• Calibrate expectations.  Let your staff in every function know what’s in the acquisition for them.  You want to get every part of the organization saying: “this is really good and I can’t wait.”  One of the most common risks is disappointment from expectations which haven’t been met.
• Engage workers.  Involve the operating people who know first-hand what’s really going to be happening.  Pull them in and engage their expertise early on rather than surprising them at the end by saying: “We’ve got this thing, now make it work.”
• Move in together.  One effective strategy is to start out as a partner with the target company and do a test run.  Find out: Can your sales people sell it?  Does it fit into your line?  Will your customers accept it?  Build a technology-reseller relationship to try and get to know each other a little better.  While a lot of acquisitions are done along those lines, through that same process, you might conclude that it really wasn’t a good fit.
• Prepare for surprises.  Whenever you decide to enter a new technology or a new industry, you can do all the research and planning you’d like, but if your company has never sold there, you should expect to find surprises down the road.
• Beware of buying customers.  When you buy a customer base, you’re buying a competitor out of the market.  But you’re also losing people from that existing customer base because they’re going to be unhappy about having to buy from a single vendor.
• Watch for pitfalls.  Sometimes the implementation of a vision goes badly because the acquired company and its acquirer don’t play together nicely.  Product components need to work together.  They need to install the same, look the same, be billed the same ways, and not duplicate each other.  Otherwise it can undermine your sales, marketing, and value proposition efforts.
  

Intellectual Property Acquisition Quick Tips Series:

• Part I of III: Intellectual Property Acquisition:
  Conducting Due Diligence
• Part II of III: Intellectual Property Acquisition:
  Contracting and Negotiating
• Part III of III: Intellectual Property Acquisition:
  Achieving success
  

Comments on this Quick Tips article can be submitted to This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Subscribe to Inside Product Strategy ™
To read our latest articles click here.