When acquirers evaluate AI companies, they're buying more than revenue and talent—they're buying future optionality. And nothing provides optionality like a strong patent portfolio. After participating in IP due diligence for acquisitions ranging from startup acqui-hires to multi-billion-dollar deals, I've seen how patents can dramatically shift negotiating dynamics.

What Acquirers Actually Value

In M&A due diligence, acquirers assess IP along several dimensions:

• Defensive value: Do these patents prevent competitors from attacking the acquirer's existing business?
• Offensive potential: Can these patents be asserted against competitors or used for licensing revenue?
• Strategic blocking: Do these patents cover technology directions competitors might want to pursue?
• Integration enablement: Do clean IP rights make it easier to integrate the acquired technology?

The Valuation Impact

Strong IP can significantly impact acquisition valuations. In competitive bidding situations, patents can be the differentiating factor that drives up the price. Acquirers are willing to pay premiums for companies where the IP situation is clean, comprehensive, and strategically valuable.

Conversely, IP problems can tank deals or significantly reduce valuations. Common issues include: unclear inventor assignments, patents that don't actually cover the core technology, freedom-to-operate risks from third-party patents, and insufficient international coverage for global markets.

Building Exit-Ready IP

If exit is a realistic outcome for your startup (and for most VC-backed companies, it should be), start building exit-ready IP from day one:

• Document everything: Maintain clear records of invention development, inventor contributions, and assignment documentation
• File strategically: Focus patents on innovations that matter for acquisition scenarios, not just current product features
• Think internationally: File in jurisdictions that matter for potential acquirers, not just your current markets
• Maintain clean chain of title: Ensure all assignments are properly executed and recorded
• Monitor freedom to operate: Proactively address potential infringement issues before they become deal problems

The Timeline Reality

Patents take years to issue. If you wait until you're in acquisition discussions to think about IP, it's too late. The patents that matter in your exit negotiation are the ones you file years before you start talking to acquirers. Start building your portfolio with exit in mind, even if exit seems distant.