So you’re now thinking that licensing makes sense as a means of accelerating the time-to-market and monetizing your leading-edge technology. You’ve identified the gorilla as well as the chimps in your space, and managed to get the attention of at least one of them. They’ve probably begun posturing and now they’re coming to the table to discuss terms. For most companies, this is a classic “Oh shit!” moment.
As I blogged previously, before you agree to sit down, it is imperative that you have established clear guiding principles. Your internal stakeholders must understand, talk through and agree to a position on the major issues. These are the “non-negotiables”, and can help prevent bad decisions from being made in the heat of a negotiation. Each of these must be taken seriously, as getting them wrong can have a huge impact on valuation and even exit potential.
Issues to lose sleep over
· Exclusivity vs. non-exclusivity
· Derivative works
· Field of Use, Territory
· Consideration (cash flow, NPV, etc.)
Each of these merits its own discussion. As my plane is now on final approach, I’ll have to get to these in future blogs.
That’s my .02!