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Nov 12Joe Worth

Check With an IP lawyer Before you Buy or Sell a Company

Nov 12Joe Worth

Most of us understand that well-protected intellectual property (IP) assets are valuable, if “off the books,” assets of a company. But what role does IP play in valuing and selling your company?

IP attorney Andrew Grove recently wrote for the PEHub Network about the role of IP in buying or selling companies. Read the article here…

While most business owners realize that IP is something they should pay attention to, it’s often one of the last things that rise to the top of their priority list. If it only gets there because you’re now actively selling your company, you may have waited too long to take advantage of a significant opportunity to add value to your business and decrease risk for buyers.

In The Exit Strategy Handbook, author and B2B CFO® founder and CEO Jerry L. Mills quotes Frederick D. Lipman in Valuing Your Business: Strategies to Maximize the Sale Price (p. 28):

One of the specific factors in the valuation of your business is whether you have legally protected intellectual property assets, such as patents, trademarks and copyrights. Your intellectual property assets will assist the buyer in protecting the business from competition and, therefore, make the business more attractive to the buyer.

Most business people do not know that they even have intellectual property assets to protect. For example, even if you have a nontechnology business, you may still be able to obtain a business method patent on some process or methodology that you use in conducting your business. Likewise, you may have trademarks, service marks, and trade dress that you use in your business that should be legally protected.

Long before your sale target date you should hire a patent or intellectual property attorney to help you identify your intellectual property assets. The process of obtaining patents can take three or four years; it is never too early to begin such a review

For more details on pre-due diligence in this and many other areas, contact me at jworth@b2bcfo.com or call 732-977-9218!

B2B CFO®

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