license negotiation workshop for tech transfer professionals real-world tactics for maximizing...
DESCRIPTION
3 Less than Maximum Revenue? Maximize portfolio revenue ► Focus on higher priority deals ► Increase deal flow Larger, non-revenue issues ReputationTRANSCRIPT
License Negotiation Workshop for Tech Transfer Professionals
Real-World Tactics for Maximizing Licensing Revenue
May 14, 2009
2
Phases of Deal-Making
Marriage
Dating
Courting
Bliss or Bust
Deal-Making
Pre-Negotiation
Negotiations
Alliance Management
3
Less than Maximum Revenue?
Maximize portfolio revenue► Focus on higher priority deals► Increase deal flow
Larger, non-revenue issues Reputation
4
Pre-Negotiation Phase
Technology Assessment Marketing Due Diligence Stakeholder Analysis Needs / Wants Identification Valuation / Comparables Negotiating Style BATNA
5
Before The Negotiation
Technology Assessment Marketing
► Group► Targeted► Organizational Selling
6
Before The Negotiation
Technology Evaluation ► Verified interest before term sheet► Think like a product manager► Tipping point
7
Due Diligence
Background on Potential Licensee► Market Cap► Product Lines► Competitors & Product Lines► Pain Points
Sources of Information► Business Databases ► Market Reports► Web Searches► Colleagues & Industry Contacts
8
Needs / Wants
Identify Needs► Those issues that are required to close/sell the deal
• Patent expense reimbursement• Publication rights• FMV when compared with other internal deals
Identify Wants► Those issues that would be nice to have
• Upfront fee v. equity• Anti-dilution protection• High end of royalty rate range
9
Valuation & Comps
Valuation► Rules of thumb► Risk-adjusted NPV
Comparables► Terms and license structure
Sources► Internal► External
10
Stakeholder Analysis
Those individuals that have a stake in the deal Important to identify all stakeholders Internal
► Your immediate supervisor► Superior with signature authority► Inventors► Department heads► Legal department
External► Potential licensee► Co-owners of the IP► Funding agencies► Regional development organizations
11
Negotiating Style
Determine the long-term relationship needed Long-term:
► Mutual respect► Initial offer should be reasonable
Short-term:► Seek maximum value
12
Negotiating Style
Principled► Keep emotions in check► Counter their emotions with a lack of emotion
Consultative Appropriate to the situation
13
BATNA
Consider key stakeholders Scenarios Compare Anticipate theirs
14
Questions & Answers
15
Negotiation Phase
Negotiation Goals Determine Participants Positions v. Interests Anticipate their BATNA Create Options Update Key Stakeholders Relationship Commitment to the deal
16
At the Table
Determine who from other side is attending Understand the scope of IP being licensed Lawyers Agreement is not essential! Clarify negotiating authority Review goals and assess progress Take good notes and summarize understanding
17
At the Table
Start with a term sheet Focus on interests, not positions
► Question their positions, explain your interests Force focus to interests
► Summarize your view of their interests Suggest options that do not give away value Beware of unilateral negotiating
18
Common Tactics
End Run (aka. High Hat)► Keep all internal stakeholders updated
Others have accepted these terms► Highlight differences between deals
Cherry picking terms► Summarize all terms as discussing each
Check with a superior► Ask to negotiate with directly
Righteous Indignation► Press them to explain their position
19
Key Deal Terms
Downpayment Milestones Rate Minimum Equity
20
Away from the Table
Keep stakeholders in the loop► Prevents an end-run
Sell the deal to all internal stakeholders► Preps them for agreeing► Helps prevent buyers remorse
21
Post-Negotiation
Legal Review & Execution Compliance Long-term Relationship
22
Resources
Getting to Yes, Negotiating Agreement Without Giving In – Robert Fisher & William Ury
Getting Past No, Negotiating Your Way from Confrontation to Cooperation – William Ury
Strategic Selling, Miller Heiman
LES & Vantage Partners Course – Advanced Negotiations Skills
Bentley, MacWright, and Ritter presentation - Dirty Little Tricks People Play in Licensing
23
Questions?
Michael Villalobos John GeiklerCleveland Clinic [email protected] [email protected] 540-443-9228