In today’s knowledge-driven economy, intellectual property (IP) often forms the foundation of a company’s value. Naturally, during mergers and acquisitions (M&A) deals, a company’s IP portfolio takes center stage. But how exactly are these intangible assets evaluated and leveraged?

Unearthing the Value: IP Due Diligence

Before any deal is finalized, a thorough IP due diligence process occurs. This involves meticulously identifying, analyzing, and valuing the target company’s IP assets. Key aspects of this process include identifying all IP (patents, trademarks, copyrights, trade secrets, and pending applications), evaluating the strength and scope of each asset, and assessing potential risks like infringement lawsuits or IP expiry.

It’s no secret that strong brands can command a premium, especially in consumer-facing industries. As such, software code, creative content, and literary works protected by copyright may also be significant assets that are worked into a possible deal. Even trade secrets, such as proprietary formulas, processes, and customer data can provide a substantial competitive edge and increase a company’s valuation.

Case Studies: When IP Powers The Deal Forward

Here are some real-world examples showcasing the power of IP in mergers and acquisitions:

• Facebook’s Acquisition of Instagram (2012): While Instagram had a small user base, its innovative mobile app and strong trademark potential made it a billion-dollar acquisition for Facebook.
  
  
• Ballast Point Brewing Company (2015): A major player in the San Diego craft beer scene, Ballast Point was acquired by Constellation Brands in 2015 for an alleged $1 Billion.
• Facebook’s Acquisition of WhatsApp (2014): WhatsApp did not have high revenues but had a large worldwide user base and brand recognition, then FB purchased it for $19 Billion.
• Unilever’s Acquisition of Dolar Shave Club (2016): Unilever purchased Dollar Shave Club because it had “transformed the shaving category with its lifestyle brand” and has built a membership of 3.2 million.

Leveraging IP for Strategic Advantage

Understanding a target company’s IP portfolio offers multiple advantages to acquirers. Acquisitions can boost innovation by securing patents or R&D capabilities. Strong trademarks can pave the way to new markets and customer segments. And, a robust IP portfolio strengthens an acquirer’s overall brand identity and reputation.

Protecting Your Innovation: The Role of an IP Attorney

Navigating the complexities of IP in M&A transactions requires an experienced legal professional. An intellectual property attorney offers crucial guidance through the IP due diligence process, advises on strategies to maximize the value of your IP assets, and helps mitigate potential IP risks associated with the deal.

Ready to Unlock the Value of Your IP?

The Law Office of Jason H. Rosenblum, PLLC understands the critical role IP plays in M&A success. Our team is ready to help you navigate every step of the process. If you’re ready to get started, call us today at (888) 666-0062 to schedule an Initial Discovery and Strategy Session or click here to schedule online. DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.