Intellectual property (IP) issues can play a significant role in mergers and acquisitions, especially with privately held companies. The seller of a privately held company has not been subjected to the scrutiny of public markets, so the acquiring party has less ability to obtain all of the IP-related data. If you are considering acquiring a privately held company, it is important to do due diligence on the selling entity’s patents, trademarks, copyrights and other forms of IP.
If you are the selling company, it is imperative that you involve your IP attorney in the transaction. He or she can help anticipate the IP-related issues that may arise in order to help ensure the sale is a success. For example, the seller should prepare a list of all IP that is relevant to the seller’s business. Below are a few examples:
- Patents and any pending patent applications
- Confidentiality or non-disclosure agreements with employees
- Trade secrets or proprietary information
- Technology licenses (from and to the selling entity)
- Computer software and databases
- Contracts that provide the selling entity will indemnify third parties for IP matters
- Domain names
- Any IP litigation, arbitration or claims for infringement against the selling party
- Liens on the IP
- Source code escrows
- Social media accounts held by the selling entity
Due to the sensitive nature of the above information, many sellers choose to house the above documents in a protected virtual data room or a monitored physical room on the selling entity’s premises. Gathering the IP-related information can be time-consuming, so you should begin the process as soon as possible in the sale process.
The above discussion is just one example of intellectual property issues an attorney can help you with when selling or acquiring a company. Obtaining the right advice from the start can significantly increase the likelihood of the transaction being a success. Contact The Swenson Law Firm for help.