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In today's technology, media and internet age, the sale or purchase of a business invariable has intellectual property components that are often overlooked. Proper identification and valuation of intellectual property is very important as it will have benefits for both the sellers and purchasers of the business.
The value of intangibles such as intellectual property as a proportion of a company's value is not just limited to fortune 500 companies, in today's social media age, small businesses with recognizable brands can attach significant value to their intellectual property such as their trade-marks for example.
Some key issues from the perspective of a seller of a business are:
Identification of the intellectual property: careful due diligence of should be undertaken to ensure that the intellectual property is not overlooked, this includes identification of confidential processes used by the employees of the business, licenses of intellectual property that are assignable and websites, trade-names and trade-marks. Registration of unregistered intellectual property: once the intellectual property is properly assessed and identified, consideration should be given to the registration of such intellectual property, for example filing a trade-mark application for a name or logo that is distinctive of the business. Valuing the intellectual property: proper consideration needs to be given to what value you should assign to the intellectual property. This may require the engagement of intellectual property valuators.
Some key issues from the perspective of a purchaser of a business are:
Ownership of the intellectual property: proper records of the intellectual property being sold is critical so that the actual ownership of the intellectual property is clear. Often issues arise when one business had purchased its intellectual property from a previous business. Licenses: if the intellectual property being sold is subject to licensing provisions, then as a purchaser you want to ensure that you are aware what terms and conditions govern the use of the intellectual property. Infringement of the intellectual property: ensuring that adequate due diligence is conducted to determine whether the intellectual property being purchased is being infringed by others or is infringing of other's intellectual property.At Sodagar & Company, we assist both sellers and purchasers of businesses in structuring their transactions, conducting due diligence and completing the sale or purchase of the business and its intellectual property components. Please contact us to see how we can assist you with the sale or purchase of your business.
