Having in consideration the growing importante that intellectual property rights have acquired in businesses, influencing the company value, Due Dillingences directed towards Intellectual Property rights have become no longer an accessory tool but became a vital proceeding to assess a companys financial health.
Due Diligence towards Intellectual Property rights consists in an audit made to the IP portfolio rights designed to assess and identify their legal status, their threats and their opportunities.
For instances, in proceedings of mergers/acquisitions it is interesting:
- to assess how important are the assets to be acquired;
- to measure the size and strenght of the portfolio;
- to identify what are the risks that the acquisition of certain assets may entail;
- to understand if the company is properly securing its assets;
- in case of exsitance of licensing agreements towards technologies/products, verifying the license status and their importance towards the business.
With a focus on Intellectual Property rights, this audit investigates the intangible assets and relevant factor of the past, present and future that may determine the business sustainability.
Relevant factors may consist of:
- A trademark representing 90% of sales in a struggling business. If that trademark is notorious in its market, it may result in a company valuation or may result in a seperate transaction.
- A startup, whose business model is a patented system, looking for an investor and arguing that the value of its business is set on the market exclusivity ensured by the patent filed 8 years ago. As an investor, you have to make sure that the patent is in force and is free of any legal issues that may rendered it worthless.
- A business whose expasion strategy is based on a Franchising model, through trademark licensing. If a legal case on unlawful competition exists against this company, there is a risk factor for future franchisees.
In short, Due Dilligence sounds like a theoretic analysis, but is vital to learn in detail the current situation of the Intellectual Property rights and the risks associated with their transaction.
It is essential to take these matters into acount on a corporate operation such as licensing agreements, investments, mergers, trademark or company acquisitions, among others due to the fact that allows the company to take preventive steps on an operation that may involve some risk.
We have a team of certified professionals, with specialized IP knowledge, to carry out IP portfolio audits and draft a final report that will reflect the analysis on the performed audit.
Directly related to Intellectual Property Due Dillingence are matters related to Asset Valuation. Learn more about this service here.