Understand completely, but what part of "Design, Prototype & sell design"
Would cause trouble ?
Large corporation takes over design, along with it all liability.
Common misconception. As an "M&A guy" all but TWO of the many firms I have been associated with, that is one thing we do NOT do!
The most common form is that we acquire the ASSETS. Only. Which include use of the name. And product IP.
"In theory" that breaks the chain - leaving the now (usually) empty of anything but cash or stock shell of the former entity on its own to defend any "old business" lawsuits.
In practice? Courts WILL "now and then" bridge that deliberate firebreak and hold the NEW entity accountable. But it is hard work, and expensive to get that done.
"The wise" do two more things;
- See to it that at least the first step in a transfer goes NOT into the deep-pocket parent corp. It goes instead into a NEW Corp with another firebreak, and limited assets.
- See to it that a professional assesment is made, R&D and testing resources the prior firm did not apply - or never HAD to be applied even had they known it was a good idea and WANTED to do -
are utilized to see to it that any risky flaws are CORRECTED. Among other things, that puts "good faith" into the record.
Sometimes it is not worth it. The product is bought. And retired from the market. Too risky. Or not ENOUGH better than an exsting product to chase small gains. Not "conspiracy to bury better goods". Simple economics. MOST products actually have very slender net-net margins.
Only some years later - if even EVER - will the new acquisition be folded-into the parent- no longer a risk.
If I recall the dates, I folded Carterphone into Cable & Wireless North America around late 1985 - no later than March of 1986? It was already OLD as a C&W property, had lost any relevance, so was basically dispersed into other operations of one of our larger North American entities. AND NOT directly into the US holding company, let alone C&W Plc, London. Took Lauren and I all of thirty minutes to do the do. Day Job. Just one more day.
My call to divest Esterline of Titmus Optical, some years earlier was the reverse. There was not enough meat on the bones of the entire US MADE US eyeglass market to cover the investment we would have had to make to even improve our CHANCES at gaining a larger slice of the market. Not enough people gave a damn if their eyeglasses were made in the US or some other place. Titmus was not the only US maker even if they had cared.
As Milacron would have never made a few copies for sale (just the prototype
units for show & tell) and the "Big Corp" get's everything in the deal,
where does the liability stand, and with whom ?
Absent existing customers, jigs, fixtures, stock, production facilities, and a proven market already in-place?
Nothing special. It just goes into their own R&D coffee mill for extraction of whatever is useful. Basically gets a do-over, treated thereafter like any other new product they had done on their own.
But then you also have the Shell company LLC game to play as well.
It's a profession, and for serious experts, not a "game".
One of my HKG clients novated about 3,000 entities every year. They had SEVERAL national governments - largest on-planet to tiny islands - to keep happy that it was all being done by the rules .. and NOT to help criminals.
PRC even "furnished" them with whom they wanted to be the Beijing Office Manager. Turned out to be a truly brilliant person, too. She would be. Came VERY highly regarded in her previous job.
Design Engineer and sub-Project Manager.
Long March rocket!
Chartered Accountant sez:
"We like to say corporate novation and Secretarial services are not exactly "rocket science'. But there you have it!"
What gets into the news?
The f**k-ups.
Those who thought they could beat the big governments and their armies of investigators. Annnnnd.. competitors and the screwed, pissed-off disgruntled who will rat-out anybody as can BE ratted-out! Oy! There are a LOT of those around!
Thinking you can beat that
combination - rats as well as bureaucrats - is simply
daft!
Long-term, they WILL
have your ass... as a substitute for a snakeskin hatband. Working WITH "Commercial Crimes" folks, HKG Police, and now and then their counterparts, PRC Gov, to catch the wrongdoers was all part of the job.
Nothing "political" about that. Cops is cops the world over.
Does Milacron still have to defend against dovetail router fixture lawsuits ?
Not if he was as wise "back in the day' as he seemed to be when I met him, no..
Classical "competent man" He knows more than just the one thing!
And/or/else his lawsters (or mine) would prevail.
