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How Due Diligence Analysis Drives a Negotiation
John M. Fleming, Banner & Witcoff Ltd.
Due diligence allows parties to a negotiation the opportunity to drive the assigned value of assets up or down. Confidential, or often shielded from certain entities, a due diligence analysis can have an enormous impact on the negotiation process.
Patents present unique due diligence issues. A seller should approach the sale from the perspective of the buyer. What will a buyer want this for? Which industry will be most impacted by this asset? This is where an infringement due diligence analysis can be a real benefit for a seller. Sometimes a seller may prepare generalized claim charts, showing a potential buyer how the patent claims stack up as a way of illustrating the patent’s value.
A buyer should be concerned with enforcement and the potential to go after another entity. Thus validity is an important factor. A validity diligence analysis can inform a buyer about prior art that is not of record and may affect eventual enforcement.
Similarly, a buyer should assess the potential for infringement action against a third party, whether through charts provided by a seller or independently.
A buyer can seek to drive down the cost of an acquisition by discussing the weaknesses with the seller, without divulging their potential correction or removal in a pending application.
In most cases, a broad view of the positives and negatives in a portfolio offering, derived through due diligence, should steer negotiations on both sides of the deal.Read the full article at:
Today's General Counsel