IP in Business Sales
Selling a business is rarely just about the numbers—it’s about protecting the value you’ve built. If your company owns intellectual property (IP), having a conversation with an IP attorney can make the difference between a smooth, profitable sale and a deal full of unpleasant surprises.
Why IP Matters in a Sale
Intellectual property is often a significant portion of a business’s value. Patents, trademarks, copyrights, trade secrets, and licensing agreements can all influence a buyer’s interest and the purchase price. If IP rights aren’t properly documented, transferred, or protected, it can cause delays, reduce valuation, or even derail a sale.
The Right Time to Bring in Your IP Attorney
1. Before You List the Business for Sale
The best time to involve your IP attorney is early, before you even hire a broker or make a public announcement. Early involvement allows you to:
- Identify and fix ownership gaps (e.g., IP created by contractors without assignment agreements).
- Ensure registrations are current and cover all relevant markets.
- Review licensing and collaboration agreements to ensure they can be transferred or won’t block the sale.
2. When Negotiating Preliminary Terms
Once you have a serious potential buyer, your IP attorney can:
- Help structure non-disclosure agreements (NDAs) to ensure private details stay secure.
- Advise on how much detail to disclose about trade secrets, patents pending, and other sensitive assets.
- Flag any IP-related liabilities the buyer might use to negotiate a lower price.
3. During Due Diligence
In the due diligence phase, buyers will inspect your IP portfolio closely. Your attorney can:
- Provide a clear IP ownership and registration report to the buyer’s legal team.
- Help respond to IP-related questions efficiently to keep the deal moving.
- Address any issues before they become deal-breakers.
4. Before Signing the Purchase Agreement
IP transfer terms in the final agreement can have long-term consequences. Your IP attorney will:
- Ensure assignments and licenses are drafted correctly to avoid ownership disputes after closing.
- Confirm post-sale restrictions (like non-compete or confidentiality clauses) are reasonable and clear.
- Verify that royalty arrangements or retained rights are accurately reflected if you’re keeping any stake.
Risks of Waiting Too Long
If you wait until the sale is already in motion to involve your IP attorney, you may face:
- Last-minute deal delays while fixing IP ownership or renewal issues.
- Reduced valuation due to unclear or incomplete IP rights.
- Potential legal disputes after closing if the buyer claims undisclosed IP problems.
Key Takeaway
The earlier you realize the importance of IP in business sales and involve your IP attorney in the sale process, the more leverage you have to protect and showcase your IP assets. Ideally, your attorney should help you prepare months before you list your business, making the sale smoother, faster, and more profitable.