Spin-Out Process In The Financial Technology Sector
To understand what is the best practice that will ensure a professional/technology product spin-out process in the banking sector.
Spin-outs or spin-offs are divisions of companies or organizations that become independent businesses with assets, employees, intellectual property, technology, or existing products that are taken from the parent company. The shareholders of the parent company receive equivalent shares in the new company in order to compensate for the loss of equity in the original stocks. The Cork Institute of Technology and the National Innovation Corps state the following steps for a successful spin-out.
- Step 1: Contacting an Industry Liaison Office (ILO) to understand how to protect the intellectual property (IP).
- Step 2: Engaging with a patent attorney through the ILO and filing a patent application before
making any public disclosure or communication of it.
- Step 3: Seeking training and network from a wealth of resources about inventors looking for help
to start a company.
- Step 4: Planning the business. Developing an understanding of market potential, proposed business model, competition, funding, the team and
how to develop the product and attain revenues sufficient to sustain and grow the company.
- Step 5: Applying for approval to spin-out. A commercialization specialist in the ILO is leading the process and provides with the necessary
application form and templates.
- Step 6: Negotiating the license or option agreement. The ILO will negotiate with a representative of
the spin-out company to grant a license to the company. In some cases, a short-term option agreement may
precede a license to demonstrate to potential investors that a company has secured the rights to
negotiate for a license to the technology.
- Step 7: Negotiating the shareholders' agreement.
- Step 8: Registering the business and signing the license and shareholders' agreement. In addition, this step includes registering the
business with the Companies Registration Office (CRO) as a Designated Activity Company (DAC).
- Step 9: Pursuing funding by presenting the opportunity to people with funds such as a local enterprise office, venture capitalists or angel investors.
Proposed next steps:
You need to be the project owner to select a next step.
This initial one-hour research could only touch an overview of the basic steps needed for a spin-out process. We propose to further research each of the steps in depth, highlighting the traps that may hide in each step and what companies should do to avoid them. Also, we will present what are the opportunities and drawbacks for spin-out corporate actions.
We could provide 2-3 case studies, focusing on the banking and technology sectors. Each case study will describe the spin-out process, the risks and implications that occurred during the process, as well as how it benefited the parties involved.