In an industry as crowded as the food and beverage industry, it’s often difficult for individual companies to grow. Smaller companies and start-ups find it quite challenging to gain market share against bigger competitors, while large companies find it difficult to innovate quickly enough to keep up with the market.
In such a saturated industry, businesses are presented with limited options for growth. Companies can grow organically, which may be too slow for the market, or by innovating more rapidly than competitors, or through M&A activities. Innovation via M&A can be a successful means of growth as long as the acquisition (1) aligns with the company’s objectives/goals, (2) can help boost - or minimally help to keep up with the market, and (3) can be effectively integrated with the parent company, to the extent desired.
A number of acquisitions have appeared in the food and beverage industry in the past several years, including Kraft and Heinz, JAB Holding and Keurig, and most recently the thwarted acquisition of Unilever by Kraft Heinz. Recent news and predictions suggest that M&A activity will continue in the sector in 2017. Companies would be wise to not only assess the business landscape of potential consolidation in the industry, but consider the IP landscape and patent owner shifts if more of the largest food & beverage corporations merge.
However, M&A growth strategies are far from simple, and often fail to account for the potential value of the IP associated with the deal.
By strategically approaching the IP of a potential acquisition target, a company can improve the overall end result and value of the acquisition. During the acquisition, a company should consider the following:
On the other side of the transaction, smaller food & beverage companies seeking to be acquired should consider their IP strategy to develop strong patent positions for their key product and technology areas. It will reduce the perceived risk of the acquirer and provide differentiation from other similar companies.Considering IP before and after an acquisition will allow for more strategic selection of high-value acquisitions, and higher return on investment post-investment. For more information on innovation, IP and M&A in the food and beverage industry, contact Nancy Cronin or Jeff Goodwin.