“Wake up sir, wake up! ”
“What is it Dougal?” Dougal of course is my (hypothetical) butler, paid for by the (hypothetical) monetisation of my (all too real) blog.
“QANTM IP has done something!”
“Really, what? Changed substantial shareholders”
“No! They have acquired a patent attorney firm.”
Well, they have done it. QANTM IP has made an acquisition – Cotters Patent and Trade Mark Attorneys. A small Sydney based firm whose main (patent) client appears to be Ali Baba – at least for the last calendar year. They also filed a large number of innovation patents in that calendar year – a revenue line that doesn’t have long to last as I have discussed here and here.
Let’s get down to brass tacks – the acquisition price is $6.3 million and 35 percent (or about $2.2 million) of that is in QIP shares. Using the rule of thumb set out in a previous post that gives us a profitability figure of about $630,000 (assuming the purchase price is 10x profit (minus a salary for equity partner drawings)).
The amount in QIP equity is relatively low (you would usually expect 50:50). This may reflect that Cotters’ partners/principals prefer to be paid in cash or a view from QANTM IP that their shares are undervalued and they would prefer to pay cash rather than use their equity (which may skyrocket :-)) to make the acquisition.
There is no discussion of whether any of the acquisition price is dependent on performance although the amounts will be paid in tranches. This may become clear later on.
It looks like a good start for QANTM IP’s new CEO, not a game-changer like the proposed merger of equals with the now defunct Xenith IP but a safe, and easily managed, acquisition.