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Intellectual property in mergers and acquisitions

On Behalf of | May 28, 2024 | INTELLECTUAL PROPERTY LAW - Intellectual Property

If you are about to go through a merger or acquisition, you need to think about the two companies’ intellectual properties (IP). You don’t want to experience misunderstandings regarding IP rights or encounter potential risks from the other company.

Below are two things to keep in mind during these business transactions:

1. Due diligence

It’s crucial to be adequately informed about the patents, copyrights, trademarks, trade secrets, and other elements of the IP portfolio of the company you want to merge with or acquire.

Examples of details to obtain include the target company’s IP portfolio’s current status, potential liabilities, strength and enforceability against third parties, real economic value and the specifics of the ownership.

You should obtain every crucial document related to the target company’s IP portfolio. Note that the other party will also conduct due diligence on your IP portfolio, whether during a merger or acquisition. Thus, you should prepare your paperwork as well.

Due diligence can take time. Hence, set aside enough time and work with professionals. For example, accurately valuing some IP assets can be a challenge. You may need to work with a valuation expert. Further, if the target company dealt with or is dealing with an infringement claim you should check if the matter is handled appropriately, or will the litigation affect your business transaction. Get a professional to assess how the claim can affect you.

2. Determine a way forward

Once you and the other company are adequately informed about each other’s IP portfolio, you should agree on a way forward. Develop plans and strategies to follow to have a smooth transaction.

You may encounter IP issues during a merger or acquisition. Consider getting legal help to obtain adequate information and, in turn, avoid deals that may negatively impact your business.