Predatory acquisition of start-up intellectual property within the communications industry

This paper considers the success factors relevant to predatory acquisition of IP within the communications industry. It is based upon a single longitudinal case-study carried out from within a takeover target company. The company in question started life making high-tech communications equipment in South-East UK and grew by exploiting a niche market until it employed about 30 people. It was bought by its USA based primary-customer who also developed and manufactured communications equipment but in contrast had an employee base of 1700. The acquired company was established as a semi-autonomous R&D unit within the larger company having the target of providing a steady stream of innovative products. The initial results of the take-over were highly successful, allowing the acquiring company to capture a 15% global share of the key market area. However the research showed that whilst the take-over was generally successful in terms of immediate knowledge transfer, the buying company struggled to maintain core technology leadership within the acquired company. This resulted in a slowing of new product development and a consequential decline in revenues once the initial product reached the end of its life. Whilst a complex combination of factors was identified as being responsible for this situation, at the core lay organizational issues existing between a large well established corporation and a small entrepreneurial company. This paper highlights the key organizational issues and develops recommendations to aid management in similar situations in the future.