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M&A Opportunities and Challenges: From small local businesses to innovative start-ups to billion-dollar corporations, a wide
range of actors can benefit from participating in an M&A transaction. However, these
transactions are not always accessible to those without the right resources or
connections. Before addressing how LEXIT intends to change this, it would be useful to
describe the current M&A environment.
Why Do Companies Undertake M&A Transactions?
Mergers and acquisitions allow ventures that are fledging or struggling to find support
while giving established companies the opportunity to attain the tangible or intangible
assets that enable them to reach greater heights. It is often easier to obtain a license,
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patent, or source code from outside of the company than to utilize valuable hours and
funds to perform research and development from within. The acquisition of a local
company, specialized start-up, or innovative technology can help an established
company enter new markets more quickly than if that company attempted to expand
organically.
For example, a manufacturing company may need a new customer service division for
its operations. Because customer service is likely not to be a key competency of a
manufacturing company, inorganic growth could save time and resources in this case.
By sourcing this division from another company and bringing it completely in-house, the
manufacturer can remain focused on its primary task while also accessing the benefits
of a thoroughly integrated customer service capability. However, such benefits are not
limited to human or physical assets. In fact, a significant portion of the M&A market
includes intellectual property like patents, trademarks, and open and closed source
code as well as other intangible assets like rights and licenses. Such acquisitions can
greatly increase a company’s ability to operate and innovate.
From the perspective of the acquisition targets, these transactions can provide the
financial and legal resources needed to continue their work. For example, a larger
company can offer the financial support that a cash-strapped venture might need to
survive. In the case of a small company that owns intellectual property, having access
to legal resources is essential. This is because individuals and small companies often
find it prohibitively expensive to assert their IP rights in a court of law—especially if they
are up against the legal teams and deep pockets of experienced corporations. In these
situations, it makes sense to be acquired by a larger company that can better protect
the intellectual property.
It is therefore clear that there are a range of benefits for both buyers and sellers in M&A
transactions. When more participants are able to take part in such activity, a healthier
business environment is created for all. Unfortunately, as outlined below, access to this
market is often restricted for a variety of reasons. What we think of as modern M&A activity has existed since the late 19th century.2 As
would be expected from anything that has been around for over 100 years, the M&A
process is in need of an update in order to better serve the requirements of today’s
buyers and sellers. At present, the internet, coupled with blockchain technology, is
moving the world toward more decentralized, democratized ways of doing business.
Archaic systems powered by opaque negotiations, powerful inner circles, and high costs
are quickly becoming outdated.
How LEXIT Streamlines M&A- A Comparison
The LEXIT Solution allows for M&A processes to be concluded four times as fast, at about a quarter of the traditional costs. Entrepreneurs are empowered to discover the true value of their assets on a vibrant and liquid marketplace, without having to bear overpriced prepayments. And most importantly - for the first time an efficient market for IP and patents is established, allowing companies to trade assets as conveniently as one would buy or sell a car or real estate.
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