In a relatively efficient market, you can reason about the average M&A profit. The typical PE/VC fund has 15% annual return (which is not really compounded) and

In a relatively efficient market, you can reason about the average M&A profit. The typical PE/VC fund has 15% annual return (which is not really compounded) and a 5-10 year horizon. So let's say the average profit over 5 years is somewhere around 100% on the invested capital, or around 50% overhead. But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that. Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices: 1. Deduct a reasonable percentage from both university grants and M&A 2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.