Small-company owners who have identified likely buyers are feeling pressure to pull the trigger and approve deals before threatened federal investment tax increases next year, says Raymond A. Miller, co-chair of Philadelphia-based Pepper Hamilton's intellectual-property group.
The tax cliff was a factor in last month's agreement by NOX Technologies Inc., a skin proteins research company that developed anti-aging products, to accept a $12.5 million offer from its longtime client Nu Skin Enterprises, Inc., a $2 billion-plus (yearly-sales), publicly-traded company based in Utah.
The deal includes NOX's patents and licensed technologies for products that Nu Skin uses in its ageLoc-brand skin-care products. "NuSkin was paying royalties so they decided to buy it," Miller told me from his office in Pittsburgh.
The sale enriches NOX chief executive Thomas B. Shelton and a handful of backers, including Malvern investor Thomas Maher, Maryland investor Richard Grieves, and other "friends and family" private investors. "Tom will move on to the next deal," Miller predicted.
The lawyers found the deal "complex," given the string of development deals between the firms over the past eight years. NOX had wound down its research and development operations and had only a skeleton staff, plus its board and managers, at the end. The deal "reduced the uncertainty with taxes going up. That is driving a lot of deals," Mller concluded. Buyer Nu Skin was advised by Dorsey & Whitney.