Improving the return on R&D investments



Entrepreneurs, SMEs, start-ups, technological centres, research centres, universities
2-3 min.
TechTransfer, Open Innovation, Acquisition, Intelectual Property, Industrial Property, Patents.

In the age of competition, constant growth is the aim for any company and beating others’ growth is seen as the path for developing market leaders. In order to maintain growth rates during large periods, companies should work on two main directions: Improving R&D portfolio and developing new fields of knowledge. This innovation process can be tackled internally but external opportunities must be considered to accelerate it as acquiring or merging another companies or incorporating the technology developed by others into its organization.

Innovation through technology transfer and acquisition can be a great catalyst and has become a crucial complement to internal, organic innovation in a growing number of industries. The synergies obtained by combining innovation capabilities are important drivers of the acquisition strategy.

When dealing with the process of buying a given technology, a significant level of effort and attention is given to “hard” elements such as a verification of the state-of-the-art, the determination of the licensing/purchase conditions, the potential market implications or the industrialization and scaling up of the technology in question. Having said this, there are numerous factors that may be just as relevant and that in many cases are largely ignored. Here are some of the ones we consider that should be carefully considered:

Specify an acquisition strategy

Keep in mind that acquisitions (patents/technologies/know-how) should be driven by the strategy, not the other way around. Understanding the industry dynamics, risks, opportunities and defining the acquisition target are key elements of having a clear strategy.

Avoid Extra Costs

Paying too much can jeopardize the profitability of the project. Nonetheless, the real value of intangible assets is difficult to be estimated for any acquisition. Different factors can influence the over-evaluation of the future acquisitions: overestimating the synergies, underestimating the cost of capital or using inflated multiples of similar transactions. Therefore, a relevant technology valuation by independent experts is an important step that should be performed before the acquisition.

Do not attempt a task beyond company’s capability

It’s important to know the limits of the corporation and not bite off more than one can chew. Performing an acquisition that can’t be integrated in the company due to existing capabilities could harm other lines.

Acquire from similar business cultures

In case of obtaining know-how, it is important to consider its impact on the cultural fit of your employees. Indeed, if the acquisition does not match the company’s culture, there is a risk that the workers may leave or may work less efficiently.

Resist the stakeholder’s pressure

Different parties are involved in the process of acquisition. All stakeholders have their own interests and objectives, which not always match the companies’ interests. It´s important to boost flexibility and resist pressure in order to achieve the goals and objectives of your company.

Be realistic about the integration process

If you think that the integration process will be easier than making the deal, we are sorry to say that you are wrong.
Some problems or issues that could happen during the integration process include:

  • Lack of time to fully master the acquired technology
  • Limited knowledge of the new technology
  • Forgetting the fact that integration requires trade-offs. The synergies created from the integration of technologies won’t happen immediately
  • Focusing exclusively on value creation from cost synergies may undermine the development capacity and growth potential of the acquisitions
  • Overconfidence can lead to underestimation of the integration process’ requirements

KIM's Recipe 6: Tech Acquisition. Ricardo Bermúdez

Recipe’s Authors

Oriol Jimeno

Oriol Jimeno · Project Manager · +34 93 266 71 38

Philippe de Vaucleroy

Philippe de Vaucleroy · Collaborator

Mar Fernández

Mar Fernández · Consultant · +34 93 266 71 38