Издательство John Wiley, 2002, -459 pp.
Understanding how intellectual property rights are involved with mergers and acquisitions—the topic of this book—is essential given how merger and acquisition (M&A) activity in the intellectual property field has come to dominate, both in volume and in value, merger transactions generally. This situation was true in the 1990s, and it is true now. The driving force behind a majority of present mergers and those completed during the past decade has been the acquirer’s desire to obtain the target’s intellectual property assets.
In the past 15 years, as the number of M&A transactions has exploded, a significant majority of these deals occurred because of the acquirer’s perceived need for the target’s intellectual property assets. These intangibles have included assets such as groundbreaking technologies, unique patents, mask works, Inteet domain names, and significant media portfolios in the form of copyrighted movies, television programming, books, and music. The mergers of America Online (AOL) with Time Waer, Exxon with Mobil, American Home Products with Waer Lambert, and Travelers Group with Citicorp were all heavily influenced by the acquirer’s desire for the target’s intellectual properties. All of these mergers have taken place since April 6, 1998. Of these four transactions, AOL’s acquisition of Time Waer represents one of the largest M&A deals in history. AOL bid $180 billion to acquire Time Waer’s intellectual property assets, consisting of a TV cable system and its huge library of copyrighted films, TV series, and magazines.
Intellectual property assets are particularly valuable because they enable firms to create and hold monopoly power on unique products and services. Key intellectual property rights can provide owners with significant business advantages by allowing, for example, the creation of specialized goods that are capable of generating high profit margins. This situation contrasts with competitors that can produce only standardized products selling at much lower margins.
Today’s role of intellectual property in mergers and acquisitions favorably compares to the role such property plays in advanced economies. For example, in the United States in 1929, the ratio of intangible business assets to tangible business capital was 30 percent to 70 percent. By 1990, such ratio was nearly reversed, from 63 percent to 37 percent. Today, more than 70 percent of U.S. growth comes from intangible asset exploitation versus less than 30 percent from tangible property.
An interesting feature of M&A activity is that it occurs both in boom and bust times. The boom side of the equation is amply demonstrated by the fact that recent M&A activity has accounted for a significant percentage of the world’s economy. Such a phenomenon is reflected in the ratio of recent M&A activity to the world’s largest economy: that of the United States. Thus, global M&A activity in the year 2000 was valued at nearly $4 trillion, or a robust 40 percent of the estimated $10 trillion American economy in 2001. M&A transactions also occur in less economically vibrant times. Much of this activity takes place when a company, to obtain the economic benefits of consolidation in a particular industry, goes out and starts buying its competitors. In the health care industry, for instance, hospitals continue to merge to acquire the economic clout necessary to force insurers to increase their coverage payments to the hospitals. For example, in Cleveland, Ohio, two hospital organizations control more than 80 percent of the market. Due to their combined economic power, these two organizations have been able to negotiate rate increases with their insurers of more than 15 percent for some hospital services.
The dominating presence of intellectual property in mergers and acquisitions coincides with the emergence of several new intellectual property-oriented M&A considerations. First, most merger and acquisition activity was once dominated primarily by the United States. This circumstance, particularly during the 1990s, changed with the sweeping globalization of intellectual property-oriented mergers. For example, in 1999 the U.S. merger volume rose to a record $1.7 trillion while Europe’s merger volume more than doubled from the prior year to $1.23 trillion. Indeed, the largest hostile takeover ever, and for intellectual property assets at that, did not occur in the United States but rather in Europe with British Vodafone’s acquisition of Hannesmann of Germany for $183 billion.
Second, because of the difference between tangible assets (such as inventory and factories) in contrast to intangible intellectual property assets, methods ordinarily used to value mergers involving tangible assets do not work well when applied to acquisitions of intellectual property. Despite the fact that M&A’s involving intellectual property has dominated the merger scene for several years, merger participants are still failing to apply appropriate M&A valuation procedures.
Third, it is unquestionable that Europe has newly arrived as a major player in the global M&A scene. Such a recent arrival also appears to have ushered in the new phenomenon of taking European Union (EU) competition law seriously. Such law deals with regulating the impact of mergers on their respective principles. Analogous American law is found in this country’s antitrust principles.
In today’s global economy, it is critical for most companies to be capable of conducting business inteationally. In other words, such companies must become knowledgeable about other nations’ competition laws or their equivalent. As this book is being readied for publication, the EU’s European Commission, which enforces EU competition law, has just rejected a proposed merger between General Electric Company and Honeywell Inteational. Some have described this action as a milestone. Not only did such rejection involve the determination by European regulators of a transaction between two American companies, but more significantly, such rejection followed upon the merger’s prior approval by U.S. antitrust regulators.
Mergers and Acquisitions: An Overview
The Role of Intellectual Property and Intangible Assets in Mergers and Acquisitions
Intangible Assets and Intellectual Property Accompanying Mergers and Acquisitions
Valuation of Intellectual Property Assets in Mergers and Acquisitions
Accounting for Intellectual Property During Mergers and Acquisitions
Intellectual Property Aspects of Acquisitions
U.S. Antitrust and Intellectual Property in Mergers and Acquisitions
Intellectual Property and Technology Due Diligence in Business Transactions
Intellectual Property, Due Diligence, and Security Interest Issues in Mergers and Acquisitions
Patent Opinions
Inteational Mergers and Acquisitions: The Canadian Perspective
Inteational Mergers and Acquisitions: The European Perspective
Intellectual Property Transfers—Holding Companies
Offshore Corporations
Acquisition and Licensing of Famous Name Trademarks and Rights of Publicity in the United States
Transfer of Intellectual Property upon Merger or Acquisition
Understanding how intellectual property rights are involved with mergers and acquisitions—the topic of this book—is essential given how merger and acquisition (M&A) activity in the intellectual property field has come to dominate, both in volume and in value, merger transactions generally. This situation was true in the 1990s, and it is true now. The driving force behind a majority of present mergers and those completed during the past decade has been the acquirer’s desire to obtain the target’s intellectual property assets.
In the past 15 years, as the number of M&A transactions has exploded, a significant majority of these deals occurred because of the acquirer’s perceived need for the target’s intellectual property assets. These intangibles have included assets such as groundbreaking technologies, unique patents, mask works, Inteet domain names, and significant media portfolios in the form of copyrighted movies, television programming, books, and music. The mergers of America Online (AOL) with Time Waer, Exxon with Mobil, American Home Products with Waer Lambert, and Travelers Group with Citicorp were all heavily influenced by the acquirer’s desire for the target’s intellectual properties. All of these mergers have taken place since April 6, 1998. Of these four transactions, AOL’s acquisition of Time Waer represents one of the largest M&A deals in history. AOL bid $180 billion to acquire Time Waer’s intellectual property assets, consisting of a TV cable system and its huge library of copyrighted films, TV series, and magazines.
Intellectual property assets are particularly valuable because they enable firms to create and hold monopoly power on unique products and services. Key intellectual property rights can provide owners with significant business advantages by allowing, for example, the creation of specialized goods that are capable of generating high profit margins. This situation contrasts with competitors that can produce only standardized products selling at much lower margins.
Today’s role of intellectual property in mergers and acquisitions favorably compares to the role such property plays in advanced economies. For example, in the United States in 1929, the ratio of intangible business assets to tangible business capital was 30 percent to 70 percent. By 1990, such ratio was nearly reversed, from 63 percent to 37 percent. Today, more than 70 percent of U.S. growth comes from intangible asset exploitation versus less than 30 percent from tangible property.
An interesting feature of M&A activity is that it occurs both in boom and bust times. The boom side of the equation is amply demonstrated by the fact that recent M&A activity has accounted for a significant percentage of the world’s economy. Such a phenomenon is reflected in the ratio of recent M&A activity to the world’s largest economy: that of the United States. Thus, global M&A activity in the year 2000 was valued at nearly $4 trillion, or a robust 40 percent of the estimated $10 trillion American economy in 2001. M&A transactions also occur in less economically vibrant times. Much of this activity takes place when a company, to obtain the economic benefits of consolidation in a particular industry, goes out and starts buying its competitors. In the health care industry, for instance, hospitals continue to merge to acquire the economic clout necessary to force insurers to increase their coverage payments to the hospitals. For example, in Cleveland, Ohio, two hospital organizations control more than 80 percent of the market. Due to their combined economic power, these two organizations have been able to negotiate rate increases with their insurers of more than 15 percent for some hospital services.
The dominating presence of intellectual property in mergers and acquisitions coincides with the emergence of several new intellectual property-oriented M&A considerations. First, most merger and acquisition activity was once dominated primarily by the United States. This circumstance, particularly during the 1990s, changed with the sweeping globalization of intellectual property-oriented mergers. For example, in 1999 the U.S. merger volume rose to a record $1.7 trillion while Europe’s merger volume more than doubled from the prior year to $1.23 trillion. Indeed, the largest hostile takeover ever, and for intellectual property assets at that, did not occur in the United States but rather in Europe with British Vodafone’s acquisition of Hannesmann of Germany for $183 billion.
Second, because of the difference between tangible assets (such as inventory and factories) in contrast to intangible intellectual property assets, methods ordinarily used to value mergers involving tangible assets do not work well when applied to acquisitions of intellectual property. Despite the fact that M&A’s involving intellectual property has dominated the merger scene for several years, merger participants are still failing to apply appropriate M&A valuation procedures.
Third, it is unquestionable that Europe has newly arrived as a major player in the global M&A scene. Such a recent arrival also appears to have ushered in the new phenomenon of taking European Union (EU) competition law seriously. Such law deals with regulating the impact of mergers on their respective principles. Analogous American law is found in this country’s antitrust principles.
In today’s global economy, it is critical for most companies to be capable of conducting business inteationally. In other words, such companies must become knowledgeable about other nations’ competition laws or their equivalent. As this book is being readied for publication, the EU’s European Commission, which enforces EU competition law, has just rejected a proposed merger between General Electric Company and Honeywell Inteational. Some have described this action as a milestone. Not only did such rejection involve the determination by European regulators of a transaction between two American companies, but more significantly, such rejection followed upon the merger’s prior approval by U.S. antitrust regulators.
Mergers and Acquisitions: An Overview
The Role of Intellectual Property and Intangible Assets in Mergers and Acquisitions
Intangible Assets and Intellectual Property Accompanying Mergers and Acquisitions
Valuation of Intellectual Property Assets in Mergers and Acquisitions
Accounting for Intellectual Property During Mergers and Acquisitions
Intellectual Property Aspects of Acquisitions
U.S. Antitrust and Intellectual Property in Mergers and Acquisitions
Intellectual Property and Technology Due Diligence in Business Transactions
Intellectual Property, Due Diligence, and Security Interest Issues in Mergers and Acquisitions
Patent Opinions
Inteational Mergers and Acquisitions: The Canadian Perspective
Inteational Mergers and Acquisitions: The European Perspective
Intellectual Property Transfers—Holding Companies
Offshore Corporations
Acquisition and Licensing of Famous Name Trademarks and Rights of Publicity in the United States
Transfer of Intellectual Property upon Merger or Acquisition