The IP formula of a merger

In my current round of discussions with a client, he asked me to formulate not only a legal document but also a mathematical prescription to explain his particular boss the importance of measuring their intellectual assets. I hope it helps a few more who read it here. When two firms come together to form a single entity with special focus on merging their assets and liabilities – a business merger is born. If the two entities are equal (in their non-IP value/worth), mostly, an exchange of stocks will take place. The acquirer will issue new shares to the shareholders of the target firm at a ratio. The target’s shares get replaced by the acquirer’s shares. The combined values of the two firms after the merger should be mathematically equal to their values had they been combined before the merger. Now, since we know that because the ratio of the exchange of shares will not be in harmony (the target’s shareholders are paid premiums) with the value of the firms with respect to each other, the individual values of the firms will be different than their values before the merger. One major spin off which emerge out of a merger, I call the ‘BIPE (The benefit of IP exchange). It is the total of the benefits the new entity gains post merger when the intellectual assets have been combined. Abandoning the other ‘share value effecting’ aspects of such a transaction, lets focus on the BIPE for the purposes of this brief. The pre merger price (in relative values) of the share for all the shareholders will always be equal to the post merger prices, if the following can be equated by putting a certain value for the BIPE –

Post merger value of a share = (combined premerger value + BIPE) / post merger no. of shares = post merger value of shares.

If the firms can’t meet the BIPE value so as to make the equations work, then it is indeed a bad merger.

US Open…takes off

US open is happening. And it is happening 6.5 miles (unerringly) from my house, at Arthur Ashe. I would love to be there. I’d love to be there not only to watch my favorite players in action, but also to see how they manage to deliberate on the game with a plane taking off their heads every ten minutes (La Guardia is next block). I do not have the tickets. Neither am I expecting someone to gift one. The subject matter looks out for an elucidation. Anyone?

Humanitarian marriage

Indian marriage laws have been, for years, carrying the load of what the religious preachers advocated, in one way or the other. Even a Baha’i faith marriage has ceremonious obligations attached. One Act distinguishes itself to a great degree and is one of the most rational piece of law. That is – the Special Marriage Act 1954. It does not only promote inter-religion marriages but also clearly tells apart the legal principles from the so called ethical norms that generally govern the marriage laws in India. This law, without a doubt trashes the Overlap Legal Theory of Blackstone which says that law and moralities (of course, so called) go hand in hand, and which has attracted the Asian legislatures for long. In fact, the Act looks inspired by the approval of Max Weber’s Interactionism by the post-independent Indian society. The Act does not only give a platform to the non-religious to marry without bowing down to the stupid religious rituals but also gives them a formal and an automatic tool to denounce their religion when it says that – The marriage solemnized under this Act of any member of an undivided family who professes the Hindu, Buddhist, Sikh or Jaina religion shall be deemed to effect his severance from such family. Bravo! Happily live the people who marry this way…or …who at least recognize, appreciate and encourage the way. The rest…nothing to worry…they have their religions to save their sacred knot ..or …knots.

Civil liberties…hmm..good joke.

This date in 1988, The Civil Liberties Act was signed. I consider this legislation to be the one of the most humane the world has seen.

Other than recognizing the wrong done during the World War II on the US citizens and the people of Japanese origin residing permanently in US, it put forward an apology, among other things it stood for. However, it categorically stated that it was intended to: ‘discourage the occurrence of similar injustices and violations of civil liberties in near future’. Many pieces of legislations, inspired by this Act of 1988 were put on paper all over. But what is needed is ‘action’. And India needs a big slice of it. The rise of Thakre, the treatment to Nasrin, the state comatose after 84 and Godhra are a few examples which confirm it has always meant nothing to us. Justice Tarkunde was just joking when he said “I believe in a country of mass poverty and ignorance, like India, humanism must take a radical form. It must be concerned with developing a movement aimed at spreading the humanist-democratic values of freedom, rationalism, and secular morality among the people so that they can take the necessary initiatives for the elimination of poverty and removal of mass ignorance”. Where is the action?

Where do they go?

A few of us know Indian governmental hospitals. And fewer know how they work. What we doubtlessly don’t know is where the majority of the patients go when they have been released before they are well enough to take care of themselves, for they have a house to go… is not certain. Shelters in India – they don’t exist. A latest L.A ordinance makes it an offense for hospitals to transfer a patient to anywhere other than his or her home without a sanction in black and white. The whole world needs this law. India needs this without delay. We don’t want sick on our roads. We want them under roofs and that too within law.

Pollute but sign

India, China and a few other developing nations cold-shouldered the G-8 Summit. The post-Kyoto showdown stands shatterproof. After the Hokkaido summit, this was a big opening. Except, we didn’t even inched. There seems only one leeway now – make a legal agreement without obligatory emission objectives. Besides?

The cricketing best?

So Sunil Gavaskar says that Tendulkar is a better cricketer than Bradman was. Afterall, he beat Bradman’s century record. Everything is about numbers. I agree. But sometimes I don’t like to. Or don’t want to. And this is one of those times. Is Tendulkar bigger than the man himself, I mean Sir M. Gavaskar. Catching in the slip, late brushing and you asked what, he just produced everything which I and my pals tried duplicating for years in the narrow cricketing lanes of Radhey Puri. Cricket to us was all about technique. And he was the man of it. Swing. Hook. Drop. Or duck. No one did it better, while I admit that Sir Vivian Richards was a close runner. Even knowing well that Tendulkar is the contemporary best, I maintain that the joy the Sr. little man’s game gave was more profound than the Jr.’s. And as for Sir. Bradman, I’d have to watch videos, if there are any.

Making money…patents or not

Ranbaxy is a generic drug maker. Daiichi Sankyo is not. They both have completely different industry representations.

The drug making giants will face huge losses between 2010 and 2012, when many of world’s hottest selling and patent protected medicines lose their IP and fakes start to skirt the international marketplace top- speed.

In this rests the logic of Daiichi proffering to Ranbaxy. Good move? Yes, only if exploits like these really bring the prices down, which in the light of enormous size differences between the large companies and generic drug makers looks difficult. In spite of everything, what rule the marketplace are economies of scales.

Red gone…time to write in black

Now with the Left powers gone, and if the Congress hangs on to rule, billions of dollars of disinvestments could bridge the multi-billion dollar budget deficits, ultimately safeguarding consumers from the rising gas prices and inflation, to a big degree. And the good news could be, if he has the guts, that the Indian PM ensues on with the privatization efforts much before the elections on May or whenever. With the red forces moving out, other chief strategy plans like permitting outsiders to invest in the Indian retail et cetera also can see some action now.

Immune to music

Yesterday was The World Music day. And I dedicated my music of this day to a revolutionary lawyer – Kleiberth Mora. Kleiberth has designed a reformist model in Venezuela which helps hardened prisoners and wayward youth learn classical music through organized orchestra programs. The music is not only keeping them become real musicians but also helping them become fine human beings. Now, this is what I call – Music in action. Brilliant job Kleiberth. Unquestionably India also needs lawyers like Kleiberth; it’s just that I doubt if the same system will work there. The glut of musical programs on the Indian television has not helped bring the crime graph down. I think we have become immune to music. Or at least to its constructive upshots.