How IP Can Increase the Value of Your Business Before You Sell It

Rosenthal IP LAW

Thinking about selling your business in the future? Whether that’s years down the line or just around the corner, it’s important to recognize that your intellectual property (IP) might be worth a lot more than you think. In fact, it’s one of the easiest things for business owners to undervalue. During the buyer’s due diligence process, IP often emerges as a key asset. What they find (or don’t find) can significantly influence the sale price.


Understanding the Value of IP


When people assess a business's worth, they often focus on revenue, customer lists, and physical assets. However, intellectual property should definitely be on that list, too. Think about it: a strong trademark, a solid copyright portfolio, a reliable patent, or a protected trade secret are all unique assets that a buyer can’t easily replicate. This uniqueness is what drives up the value of your business. A well-maintained IP portfolio not only demonstrates your business’s long-term potential but can also directly impact how much a buyer is willing to pay.


On the flip side, if your IP is undocumented, unregistered, or unclear, it can seriously harm your business’s value. If buyers can’t verify your IP, they’re unlikely to pay for it, and in some cases, it could even derail the sale entirely.


Navigating Ownership Complications


One of the most common pitfalls for business owners comes right before a sale. Many assume that their business automatically owns everything it creates, like its website, branding, and technology, simply because it paid for it. However, IP created by contractors, freelance developers, or even some employees is not guaranteed to be owned by the business unless it's clearly outlined in contracts.


A real-world example of this can be seen in the case of Whitewater West Industries, Ltd. v. Alleshouse. After acquiring a business, the new owner had to defend patent rights involving inventions created by a former employee. The court battle highlighted a significant risk for buyers: if the assignment paperwork from the past isn’t clear or ownership isn’t well-documented, they could find themselves in a dispute over rights to the very technology they thought they had purchased.


What Buyers Really Want


During due diligence, buyers and their legal teams typically look for:


  • Registered trademarks, patents, and copyrights that are current and properly filed.
  • Written agreements that clearly assign IP created by contractors and employees to the business.
  • A clear history of ownership without any hidden disputes or litigation related to the IP.


Experts recommend that business owners start tightening up their IP documentation six to twelve months before putting their business on the market, rather than waiting until the last minute. The businesses that fare best during a sale are those that have treated their IP as a valuable asset, documented ownership clearly, and kept everything organized well in advance.


A Little Preparation Goes a Long Way


If you’re even slightly considering selling your IP in the coming years, now is a great time to review your IP portfolio. If patents are likely to be part of the sale down the road, it would be wise to consult a patent attorney to examine your assignment records and ownership chains before buyers start asking questions. Similarly, you should be using and protecting your trademarks properly, with clear ownership of the trademarks and their goodwill. Additionally, since copyrighted content, software, and creative assets are crucial for valuation, working with copyright law firms that understand how these assets are valued can make a big difference.

Rosenthal IP LAW is here to help you set up a consultative service to protect and document your IP, ensuring it adds value to your business rather than becoming a question mark during a sale.

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Although the right for women to vote in the US didn’t arrive until 1920, women were given the right to apply for a patent at the same time as men in 1790, when the Patent Act passed, allowing anyone to petition for protection of their original inventions and designs. This paved the way for Mary Dixon Kies to become the first woman, in 1809, to successfully file a patent that belonged to her. It was for a process of interweaving silk or thread into straw to make fashion-forward straw bonnets. Today we’re giving a very grateful shout out to the following 7 women whose ingenuity gave us everyday items of convenience we can’t live without. The Call Button. Miriam Benjamin , a schoolteacher, invented the “gong-and-signal chair” in 1888, which made it possible to call for assistance while seated, anywhere attendants were needed. From noisy train stations and hospitals to hotels, theaters, and offices, this handy tool allowed users to receive services wherever desired. The next time you’re on a flight and want to hail the flight attendant, thank Miriam as you press that call button above your head . Central Heating. Alice H. Parker filed a patent for her heating system in 1919, which involved drawing cool air into a gas furnace, then passing it through a heat exchanger, which then transported the heated air throughout the house via ducts. Now using natural gas instead of wood, her invention changed the game for domestic heating. Wi-Fi, Bluetooth, GPS. Hedy Lamarr , the actress who starred in Samson and Delilah, Ecstasy, and Ziegfeld Girl in the 1930s and 40s, was involved in developing a device that would prevent enemy ships from blocking torpedo signals during the Second World War. The invention allowed radio guidance transmitters and the torpedo's receiver to jump between frequencies simultaneously, which became known as "frequency hopping." Today, this is known as spread spectrum technology, and it gave way to the development of Wi-Fi, Bluetooth, and GPS. Windshield Wipers. Mary E. Anderson made her living being a rancher and real estate developer. However, in 1903, Anderson came up with a system that could automatically wash cars, which then gave way to the windshield wiper. Car Heater. Margaret A. Wilcox made traveling far more comfortable when, in 1893, she filed a patent for a car heating system. Originally designed for public railway cars, this technology has been consistently updated over the years and led to the car heaters we appreciate today. This heating system involved running a channel of air through the engine, where it was heated, and then sending it back into the rail cars. Ice Cream Maker. Nancy Johnson invented a device in 1843, the Artificial Freezer, which was the first hand-cranked ice cream churn. It sped up the amount of time it took to make ice cream or sorbet. Prior to her ingenuity, ice cream was made using very intensive labor and it often took a person hours to make. Funny enough, at that time, one could make the frozen treat but we’d have to wait a few years to find a way to store it so that it remained frozen since refrigerators hadn’t been invented yet. Caller ID. Shirley Ann Jackson , a physicist, is responsible for making caller ID accessible to all of us. In 1976, Jackson was hired by AT&T, where she researched in a number of fields. From this research, Jackson developed caller ID technology, something we wouldn't want to live without today. Not all patent filers started out as engineers or scientists – as you can see, they came from all walks of life and had one thing in common – the strong desire to pursue their creative idea to fruition. Registering a trademark or applying for a patent is an endeavor that has become more detailed and intricate over the years. There are enough possible twists and turns in the life of your application to deserve guidance from a professional. I work with my clients from initial consultation, to understand their product and intention, and through every single step, roadblock, and detour. If the thought of registering a trademark or applying for a patent has been your dream and passion, let’s discuss how to make it happen.

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