How Mergers and Acquisitions Could Occur on the Blockchain


Why LEXIT offers hope to an industry oblivious to change…

Mergers and acquisitions are difficult. There is the initial negotiation, followed by all the legal wrangling that can take months. Ultimately, the whole process leaves a bitter taste in the mouth of everyone involved due to the concessions both sides must make to get a deal through. It takes too long, it’s expensive and it occurs in such a way that everyone is left feeling unhappy about some of the terms that end up being agreed. The adage of the lawyers being the only winners is undoubtedly true in this instance.

One company is trying to change this. LEXIT are an early stage tech company attempting something revolutionary. They are trying to bring every stage of the merger, acquisition or sale of assets process online and into the 21st century. This is a far bigger problem than many people realise, while it is also a significant enabler of innovation. A typical assumption for most is that this has little bearing on the success of companies. Not so fast. One of the biggest problems in business is the time it takes to make these agreements where IP or assets prevent a company progressing as quickly as they wish.

Another potential use case for this is the licensing of patents or IP instantaneously, which would enable ambitious companies to progress without any delay. That would be an improvement of several orders of magnitude over what we have now taking the brakes of an unnecessarily burdensome process for all.

Yet almost nothing has changed in this domain in the last century. It remains the way it is now because its the way things have always been. We expect negotiations to be a fight, to be tense and frustrating and to cost a lot of money so that’s exactly what they do. Our expectation has become reality.

Just because that is what has become the expectation doesn’t mean we must accept that it is the only way it can be done. Allowing something to persist because it is the way it has always been is not only a signal for disruption it is a sign of insanity. When the default mode of anything is frustration for all parties there’ s a chance to burn what exists to the ground and rebuild it.

Another way inspired by technology

The blockchain promises to revolutionise almost every industry. Right now, that might seem like hyperbole but the reality is that any system where there is an intermediary, the blockchain has an opportunity to replace them.

Mergers and acquisitions are no different. Where a standard template of terms can form the origination of all negotiations, bespoke conditions can be inserted as required. What could emerge is a marketplace where businesses can exist, their metrics can be communicated and sale price can be shown to potential purchasers. Furthermore, the blockchain ensures both privacy and anonymity can be maintained until such time as negotiations are ready to progress. A double blind marketplace can emerge which matches acquirers with sellers while allowing both sides to remain anonymous for as long as they prefer.

This promises to disrupt the existing monopoly Lawyers currently have of these processes. I’m not saying they never provided a quality professional service, I’m saying they had Carte Blanche to charge extortionate prices in a protected market.

Another theory though is that the blockchain offers a unique opportunity for Lawyers in particular to increase their productivity by several orders of magnitude.

Either way what exists currently is going to be destroyed

Smart contracts will replace traditional paperwork ubiquitously, where the blockchain transfers payment when the appropriate conditions have been met. Think the delivery of wheat where payment is triggered when the delivery vehicle hits certain co-ordinates for geographic location on a map. The block chain updates and the ledger records all relevant information for all parties.

That is the beauty of this revolution — radical transparency and absolute trust.

The removal of an unneccesary volume of lawyers at the centre of these exchanges simplifies things tremendously. It eradicates any conflict of interest which has been increasingly apparent — professionals elongating or increasing the complexity of their services in order to expand the fees they are due. It simplifies and streamlines the process, potentially making mergers and acquisitions as simple as any transaction on an e-commerce platform right now, only the blockchain ensures certain procedures are fulfilled.

Fewer intermediaries = less disputes, only facts recorded for all to see. Disputes are resolved by referring to the information recorded

One project fascinates me in this domain

LEXIT allows entrepreneurs to do anything with their assets — from the trade of intellectual property, copyrights and technology through to the sale of entire companies.

Blockchain-based tokenisation models encourage the removal of the waste currently present at every stage of the merger and acquisition process by making it as simple as selling a product on eBay.

Lexit’s promise is incredibly bold

It’s mission is to open merger and acquisition to a far larger market where sellers are able to find buyers far more efficiently than the traditional process as well as decreasing the time and cost involved in the process.

Disrupting the way in which companies and their IP are being bought, sold, and licensed using Blockchain Technology

That is the promise of this new platform

LEXIT will revolutionise mergers and acquisitions by replacing expensive and inefficient mediators with a distributed network of independent assessors and matchmakers. Where previously lawyers sat as the arbitrators of truth in every transaction, LEXIT distributes the process and ensures equanimity in what is agreed.

Radical transparency is fascilitated by a platform which ensures transparency

The highest quality service and companies are assured through the meticulous verification of all projects listed on the platform. Each one is analysed and assessed by a distributed network of independent appraisers and industry specific specialists.

And LEXIT’s service providers are screened, high-quality contractors, subjected to a rating and reputation system, generated and assured by buyer input

So what difference can this make?

LEXIT allows for the merger and acquisition processes to be concluded four times as fast and at about 1/4 of the traditional cost. The power is given to the Entrepreneur to search for and discover the true value of their assets on an open marketplace. They don’t have to pay anything upfront which would discourage their participation, everything is upfront and clear.

That is transformational

The difficulty that M&A activity brings discourages a large number of companies from participating. Companies remain stagnant for years with owners who no longer harbour the passion for their company. A blockchain that simplifies the process promises to open the doors to change. Innovation can be encourage by enabling ambitious companies to acquire assets they would never have been able to previously.

In the same way the internet openened the doors to a new age for consumer purchases, the removal of expensive intermediaries promises to mark the dawn of a new age for corporate purchasing.

How Mergers and Acquisitions Could Occur on the Blockchain was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

Posted by Chris Herd on March 2, 2018 @—-3a8144eabfe3—4

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