Thought Exercise on AR M&A

The below is a thought exercise to go through the potential dynamics of MVIS selling a single vertical to a given acquirer and the way that could best be structured to capture the most value for both MVIS and the acquiring company:

Given the astonishing market growth that augmented reality is expected to achieve in the next few years (take your pick of forecasts), some long-term MVIS shareholders are not particularly keen on the idea of selling this vertical as part of the company's current business plan.

Indeed, augmented reality eyewear displays have always been the application for MicroVision technology with the most customer demand and the highest value. Now that MicroVision is inside Microsoft's HoloLens 2 and IVAS products (uncredited), the company has proven to the world that its laser beam scanning technology can scale into disruptive, volume products offered by the world's largest company. 

So as I was thinking about some shareholders' reservations about selling the augmented reality vertical at the cusp of its exponential growth, I thought that even the acquiring company may not capture all of the value with just a straight acquisition of MVIS. This is because if Microsoft bought the company, they already have gargantuan revenues from their global software sales -- so a hypergrowth augmented reality eyewear business unit would help their growth, but the full story might be obscured a little bit being part of the larger MSFT. 

So I started thinking about the best way to capture the most value in the market from the synergies of MVIS and MSFT together, for the benefit of both companies' shareholders. 

Under this arrangement, 

1. MVIS provides NEWCO the laser beam scanning IP for AR use cases and key personnel. 

2. MSFT provides NEWCO their own IP (built on MVIS), key personnel and operating capital.

3. MSFT provides MVIS a cash payment for the sale of the AR vertical to NEWCO.

4. NEWCO distributes shares of NEWCO to MVIS and MSFT shareholders. 

After this transaction, MVIS has:

1. Significant cash payment to distribute to shareholders.

2. Shares in well-funded NEWCO to distribute to shareholders.

3. Interactive Display and LIDAR verticals to monetize or further develop. 

After this transaction, MSFT has:

1. Majority ownership of well-funded NEWCO spin out to drive eyewear product roadmap for Mixed Reality.

2. Retired threat of MVIS eyewear IP going to FB, AAPL, AMZN.

After this transaction, NEWCO has:

1. Laser beam scanning technology for eyewear displays including all IP, software, hardware and designs.

2. World's leading engineering personnel for laser beam scanning technology.

3. Robust funding to acquire additional technologies (lenses, etc) and drive the product roadmap forward.

4. Opportunity to IPO and capture market value multiple as well-funded pure-play augmented reality company with the best technology, personnel and IP. 

Win, win, win.