Technology Licensing, Partnerships, and Joint Ventures

Introduction

Technology licensing, partnerships, and joint ventures represent an increasingly important category of TMT deal activity that sits between organic growth and full M&A. These structures allow companies to access external technology, talent, and market positions without the regulatory complexity, integration burden, and capital commitment of an outright acquisition. The technology licensing market exceeded $2.1 billion in 2025 and is projected to reach $5.6 billion by 2035 (an 11.7% CAGR), reflecting the growing strategic importance of licensing as both a revenue model and a deal structure. A 2025 Boston Consulting Group survey found that 60% of CEOs and business leaders believe that forming joint ventures and partnerships will be more critical to growth than M&A over the next three to five years. For TMT investment bankers, these alternative structures generate advisory mandates, frequently precede or substitute for full acquisitions, and are becoming the primary mechanism through which Big Tech accesses external innovation in an environment of heightened antitrust scrutiny.

Technology licensing agreements grant one party the right to use another party's intellectual property (patents, software, proprietary technology, trade secrets) under defined terms, in exchange for compensation. The structure of that compensation varies significantly across TMT sub-sectors.

Common TMT Licensing Models

Percentage-based royalties are the traditional licensing model: the licensor receives a percentage of the licensee's revenue generated using the licensed technology. This model is dominant in semiconductors, where companies like Qualcomm earn substantial revenue by licensing chip designs and wireless patents to device manufacturers. Qualcomm's licensing segment generates billions in annual revenue because it holds foundational patents for mobile communications technology that every smartphone manufacturer must use. Fixed-fee licenses involve a one-time payment or annual flat fee for the right to use the technology, providing revenue certainty for the licensor. This model is common for enterprise software where the licensee deploys the technology internally. Subscription-based licensing has become the dominant model in software as the industry has transitioned from perpetual licenses to SaaS. Under this model, the licensee pays recurring fees (monthly or annual) for continued access to the technology, creating the recurring revenue streams that drive software valuations. Revenue-sharing arrangements split the economic value of a jointly developed or jointly marketed product, common in co-development partnerships where both parties contribute technology or market access. Cross-licensing occurs when two companies grant each other rights to use their respective patent portfolios, often as a settlement to patent infringement disputes or as a framework for ongoing technology collaboration.

The most significant licensing trend in TMT is the use of licensing agreements as a structural alternative to acquisitions, particularly by Big Tech companies facing regulatory constraints.

Strategic partnerships range from informal co-marketing arrangements to deeply integrated joint ventures with dedicated governance, capital, and shared economics. In TMT, partnerships serve several strategic purposes that differ from traditional M&A.

The strategic logic for partnerships over M&A is strongest when the parties need to collaborate but neither wants to cede control, when regulatory barriers prevent a full acquisition, when the technology or market is too uncertain to justify a full-price acquisition, or when the partnership allows both parties to retain optionality (the ability to deepen or exit the relationship based on results). Many significant TMT acquisitions were preceded by partnership relationships: the acquiring company initially licensed the target's technology, observed its performance within the acquirer's ecosystem, validated the strategic fit, and then made a full acquisition offer with higher conviction and lower integration risk.