Home Services Transactions Our Team Offices  
 

Outventuring:
Technology Portfolio Optimization and transfer

Many of our clients find it helpful to view their R&D operations — particularly centralized R&D — as a technology portfolio. And, just as with a portfolio of financial or operating assets, adjusting the mix of the technology projects can have a powerful effect on the yield from R&D investment.

Selected Transactions
Represented Clariant in the sale of its Polysilazane coatings business.

Exclusive financial advisor to Celanese in the sale of its common interest in PEMEAS GmbH.

Represented Aspherio in the negotiation of a strategic alliance and a management services agreement, with GSI Commerce Inc. .
 
  For clients that seek to realize financial value from a promising technology or an emerging business unit which no longer fits with the company’s strategic objectives, the firm has pioneered the development of outventuring. Outventuring is a process that results in technology transfer, but it goes well beyond licensing. Outventuring creates and captures far more value than typical licensing — both up-front and over time — while simultaneously creating a mechanism for management participation, and a clear exit for the parent company seeking to be free of managerial responsibility for the non-core operation.

Outventuring is part of an exercise in portfolio optimization.
 
 
  Typical Characteristics of an Outventuring Deal at Closing
Typically, outventuring does not require staff reductions. The following are the typical results of an outventuring transaction at closing:

  Terminates liability of exiting company to fund operating or capital expenses of outventured unit
Creates management ownership stake in new company holding rights to technology and business plan
Implements business plan agreed to by exiting company, new investor(s) and management
Provides for transition services and lease agreements by exiting company
Generally relies upon a combination of joint development agreement, marketing and production licenses, and employment agreement
Triggers meaningful cash payment to exiting company at closing
Leaves exiting company with substantial interest in Newco
Preserves jobs within outventured unit

   
   
   
   
   
  Technology Divestiture
Sometimes, there is no residual ownership held by the exiting company in the emerging technology; it sells its entire interest, and the transaction becomes a technology divestiture. The difference between licensing and a technology divestiture project basically boils down to people. In a technology divestiture, the project team’s jobs move with the intellectual property to the new owner.
 
 
  • One of our German clients recently divested an emerging energy technology that no longer corresponded to its corporate strategy. In addition to receiving a substantial selling price in cash, the exiting company was assured that all of the employees who sought to go with the new owners would keep their jobs. The unit was acquired by one of the world’s leaders in communication electronics and advanced electrical equipment. (Germany/France)

Technology Portfolio Review
Sometimes our clients know exactly which projects they want to exit, i.e., they have identified the question marks or exit situations in their R&D portfolios. In other cases, we provide pre-transactional advisory services in the form of a technology portfolio review. A technology portfolio review evaluates the likely outcomes for those emerging technologies that are "question marks" or exit situations.

  Acquisitions and joint ventures
Divestitures and recapitalizations
Management buyouts and financing activity
Copyright 2013 JH Lillian & Co. All rights reserved.