Technology companies are going to war over patents. Not only are they paying billions of dollars for intellectual property, but they’re also filing lawsuits to protect their investments.
A recent case that started a few days ago is one that Oracle brought against Google. Oracle claims that Google’s Android operating system copied Java code, a “programming language and computing platform first released…in 1995.”
While the trial’s outcome will be important for software developers regarding what constitutes copyright infringement, Oracle’s history with Java provides a lesson about opportunities for all private business owners.
Growing Via Acquisition – The Preferred Method
Java did not always belong to Oracle. In 2009 Oracle bought Sun Microsystems, the company that created Java in 1995, for $7.4 billion. Once the acquisition was complete, Oracle CEO Larry Ellison hailed Java as “the single most important software asset we have ever acquired.”
That’s what Java is, an asset. And the asset was so valuable that Oracle was willing to pay top dollar for it. Fast forward to the present day, now Oracle is in court with Google to make sure that its $7.4 billion asset is protected.
Many companies prefer to buy existing technology rather than try to develop it internally. Acquiring patents and intellectual property is much faster than the typical R&D process. Plus, the technology is already proven.
But Oracle is not the only company looking to grow its business through. There have been many others in the technology field.
- AOL announced that it was planning to sell 800 patents to Microsoft for $1 billion and change last week.
- Facebook bought software and technology patents from IBM in March.
- Google bought Motorola Mobility for approximately $12.5 billion in August 2011.
For more in-depth reading about the technology industry’s patent war, check out Steve Lohr’s New York Times piece.
The Opportunities For Business Owners
The rush for patents underscores two main opportunities for business owners: the chance to develop intellectual property that’s attractive to larger companies and the chance to properly plan an .
Each business has the opportunity to create game-changing technology or systems in their industry. If owners can do this, then buyers will be chomping at the bit to purchase a company for that asset alone. And this is true of all industries, not just software development.
The second opportunity is exit planning, which isn’t usually viewed as an opportunity. Business owners have heard it a thousand times: “You need to plan your exit. You need to plan for retirement.” While everyone knows exit planning is something that they need to do, hardly any actually do it.
Instead of looking at planning an exit strategy as mandatory, business owners should look at it as an opportunity to cash in on their years of dedication to their companies. This is their one shot to get the most money for their time and energy spent.
If owners plan their exits, then they can get the maximum value for their companies. If they don’t spend any time planning, they’ll probably leave money on the table.
While all of the companies looked at today are in the technology field, there are big players in every industry looking for ways to expand and lock down a larger part of the market. This means that the more strategic business owners are with their company, the more likely they are to receive top dollar when they decide to sell.
Want to learn more about growing your business? Download a free copy of Building and Exiting a Desirable Business today.