Member Lesley Stolz Speaks: Build a Shared Vision
The Challenge:
The case at hand was brought by a fellow Alliance member who plans to eventually sell their company and needs to own the critical technology it currently only licenses. However, as of now the IP owner won’t sell at a reasonable price.
If you were in this situation, what would you do?
“I would create a personal relationship with the intellectual property owners and invest time in them individually, so the idea of becoming a part of my firm would feel less risky to them,” says Lesley Stolz.
“If I hear you correctly, the IP owner isn’t willing to sell because they are getting too much free cash flow and are happy with the way things are.
“Fundamentally, you have two options. The first is to buy their firm but allow the owners escape options that allow them to go off on their own while leaving you with the IP rights you need. The second option is to let them remain as an independent business, but create ‘chains’ to pull in the company, or the IP rights, in case you sell your company.
“If it was my firm, I would pursue the latter option. But first, I would create a personal relationship with the IP owners and invest time in them individually. Eventually, they would figure out what it would feel like to be a part of my firm. The idea is to create a shared vision, which would make the idea of an equity share or actually being a part of my firm feel less risky from their point of view.
“After building this relationship, I would negotiate a price with the IP owners and tie them into an option based on the future expected sale of my firm. In other words, they would agree to sell their company or simply sell the IP rights along with my firm in case of any exit. That way, I would get the technology I need to sell the company and the IP owners would get the price they need for either their company or the technology. Either way, both sides win.”
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