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German research institutions produce world-class science, yet university spin-offs continue to face a practical bottleneck: securing intellectual property (IP) on terms that founders and investors can evaluate before committing capital. The German Spin-off Framework (GSOF), published on 18 June 2026, addresses this challenge through a voluntary national reference framework for equity participation, licensing terms, and negotiation timelines. Its value lies not in prescribing a single contract template, but in making the expected range of terms more transparent at a stage when uncertainty can impose significant costs.
The GSOF represents a voluntary commitment by research institutions, technology transfer offices (TTOs), and investors. Rather than imposing bind- ing rules, it establishes reference parameters for IP licensing, equity participation, and spin-off negoti- ations. In particular, it defines a ‘landing zone’ for two variables likely to prolong negotiations: the licence fee and the institution’s equity stake. This provides a credible starting point without displacing the need to assess the technology, business model, and transaction on their individual merits. The framework has attracted support from prominent institutions including TUM, Fraunhofer, Max Planck Innovation and RWTH Aachen, as well as investor communities and law firms.
Voluntary standards, not statutory entitlement
The GSOF guides the parties’ approach but does not determine the legal or regulatory requirements applicable to a transaction. Research institutions must still assess, case by case, requirements under state-aid, budgetary, competition and insolvency law, in- cluding whether the consideration is market-conforming and whether a licence, assignment, or hybrid structure is appropri- ate. Documenting the landing zone may make the institution’s economic rationale more transparent while giving founders and investors a clearer basis for due diligence. The framework thusstandardises the starting position without turning the subse- quent legal and economic assessment into a mechanical exercise.
Equity and royalty parameters
Equity participation generally falls within 5% to 15%, with 10% to 15% as the indicative range for life-sciences spin-offs. The institutional participation should take the form of ‘real’ equity, calculated on a fully diluted basis and subject to dilution in sub- sequent financing rounds. Alternatively, the parties may agree on a fixed 5% participation that remains non-dilutable until the company reaches a valuation of EUR 10 million. These percent- ages are reference points rather than fixed entitlements. The appropriate level must reflect the financing plan, the contribution of the IP to the business, and the overall transaction structure. Royalty rates are linked to product-specific net sales and vary by sector. The framework provides a general reference range of 1% to 5%, with indicative ranges of 1% to 4% for therapeutics as well as gene and cell therapies, 3% to 6% for Class IIa to III medtech devices, and 5% to 10% for class I medtech products and soft- ware. The applicable rate should be determined by reference to the relevant sector and International Patent Classification (IPC), the quality and scope of the IP, market potential, and technology readiness level (TRL). A rate at either end of a range may therefore be justified depending on the transaction.
Economic alignment and value sharing
The GSOF’s remaining economic provisions are designed to pre- serve liquidity and align payment timing with value creation. Milestone payments should be weighted towards later stages of development and linked to the spin-off’s progress and ability to pay, rather than concentrated in early, capital-intensive stages. The spin-off’s share of sublicensing income should generally range from 5% to 25% and may be higher where it has made no substantial contribution to further development of the technol- ogy. From the grant of the licence, the spin-off should bear patent costs proportionately for the relevant field of use; the parties may also address reimbursement of patent costs incurred before the contract. A central economic relationship under the framework is that between equity and royalties: a higher equity stake should generally be accompanied by a lower royalty rate, whereas a lower equity stake may justify a higher royalty within the applicable sec- tor-specific range. The individual terms should not be determined in isolation. Rather, they form part of an overall package intended to reflect both the institution’s contribution and the spin-off’s fi- nancing requirements.
Timetable and preparation requirements
The GSOF establishes a defined timetable: four to twelve weeks for agreeing the financial terms, followed by a further four to twelve weeks to finalise the definitive agreement. This timetable is real- istic only where the transaction has been adequately prepared; it does not imply that an insufficiently defined IP package or un- settled transaction structure can be completed within 24 weeks. The framework therefore treats speed as the result of preparation rather than as a substitute for it. Before substantive negotiations commence, the institution should engage with the founders early and identify the relevant IP with sufficient precision. The found- ing team and TTO should designate representatives who remain available throughout the process. The founders should provide a business plan covering the proposed product, business model, fields of use, and financial projections. The parties should also establish whether the transaction will take the form of a licence, assignment, or hybrid arrangement, and develop a shared un- derstanding of the significance of the licensed IP to the business model. An unclear IP perimeter, changes to the founding team, or the absence of an adequate business plan may extend the negoti- ation period and increase transaction risk. The GSOF’s timetable can operate effectively only once the relevant personnel, informa- tion and commercial assumptions are in place.
Practical benefits and outlook
Founders and investors benefit from earlier transparency on licence economics and expected institutional participation. This can facilitate financing discussions, reduce time spent negotiating outside the landing zone, and align milestone payments with develop- ment risk and the spin-off’s ability to pay. For research institutions, the same discipline provides a more robust basis for documenting why the agreed combination of equity, royalties, sublicensing income, and cost allocation is economically justified. The framework can therefore promote efficiency through preparation and standardisation while preserving flexibility for terms tailored to the technology, sector, and financing structure. The GSOF’s practical significance will depend less on the formal adoption of its reference ranges than on how they are used in individual transactions. Its voluntary character permits departures where the technology, sector or financing structure so require. Such departures should, however, remain reasoned departures from an identifiable reference position rather than the product of negotiations beginning without a common point of departure. The framework’s significance therefore lies not in contractual uniformity, but in establishing a common baseline against which transaction-specific departures can be identified and justified. If applied in this manner, the GSOF may achieve more than a reduction in negotiation time: it may alter the structure of the bargaining process itself by making the principal economic assumptions of a university spin-off trans- action visible before the parties commit substantial capital and resources to the negotiation.
About the author:
Dr Stefanie Greifeneder, Partner at Heuking, is an expert in regulatory, commercial, and contract law issues in the life sciences sector. She advises on all regulatory and contractual issues in M&A and private equity transactions.
Niclas von Woedtke, Partner at Heuking, is an expert for M&A, venture capital and corporate law issues. He advises on all aspects of the ‘life cycle’ for highly innovative companies, in particular in the life sciences and defence sectors – from company foundation, employee incentive schemes, strategic partnerships up to M&A transactions.
