How IP Will Be Impacted During the M&A Process

Intellectual property, or IP, is an essential component of any merger or acquisition (M&A). As our economy becomes increasingly reliant on technology and innovation, the role of IP in any M&A also becomes increasingly important because of the immense value it can add to a business. 

If you’re considering an M&A, it’s essential that IP due diligence be part of your investigation process. 

Important IP Considerations During an M&A

One should never assume that IP rights will automatically transfer when a company sells its business or merges with another. In fact, a common issue that comes to light during IP due diligence is to discover there are chain of title issues related to an IP asset. 

This could mean that titles for an IP asset hadn’t been updated with a corporate name change or the title wasn’t updated to reflect an acquisition by a new owner, for example. 

While these issues can generally be resolved relatively easily, it’s important never to overlook them during a business transaction.

Placing a Value on IP

Moreover, determining the valuation of IP rights is also a complex but essential exercise during the M&A process. Putting a value on intellectual property can be more nuanced than valuing a piece of physical property but is no less important. 

You’ll want to consider potential replacement costs, the current market value as well as the predicted future value of any IP investment you make as part of an M&A deal.

It’s important to never overlook the role of IP in any M&A process. For help navigating the challenges and opportunities a business sale or purchase can present, get in touch with our commercial law team at Silverberg|Brito, PLLC today.

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