Increasing value with intellectual property during mergers

On Behalf of | Mar 30, 2022 | Business Law

Intellectual property, or IP, turns ideas into profits for a business in Washington. Every form of intellectual property has potential value to consider during a merger and acquisition transaction.

Evaluating IP assets

Some owners can only grow their businesses through the acquisitions of other businesses that have intellectual property. An increasing number of mergers involve IP or technology that is seen to increase the business’s value.

The importance of due diligence

During a merger and acquisition, or M&A, the process of due diligence is necessary to investigate the company’s assets and liabilities. Potential buyers should review the IP’s value and consider the benefits and drawbacks of including IPs in business transactions.

Other considerations during an M&A

Another consideration to make is to draft a non-disclosure agreement to maintain the confidentiality of a buyer-seller agreement. The two parties have to decide how broad or specific in coverage this contract must be. Also important is to investigate any patents, trademarks, copyrights or IP licenses involved. Buyers should find out if there is past litigation or if there are pending lawsuits that involve the IP assets or technology. Overall, the main goal of the buyer is to decide the kind of impact that the IP will have on the business.

Increasing the value of your merger

When undergoing due diligence for a M&A transaction, consider the value of the company’s intellectual property assets. Most intellectual property has high monetary value that generates years of profits for a company. However, in some cases, the patent is expired, or the idea is not profitable anymore. It’s important to apply due diligence to evaluate the worth of an IP and determine its impact after the merger.