Don’t Let Unprotected Intellectual Property Negatively Impact the Value of Your Company
There’s so much to think about when you’re selling a company and your intellectual property (IP) might not be first on your list of considerations – yet it could seriously impact the value of your business when you go to market.
Our experience as both entrepreneurs and corporate finance experts means we can give you the benefit of our hindsight on this and many other factors, so that you can sell your company with ease, pride and success.
In this instalment of our blog series on the common pitfalls that could trip you up along the way, we’re reminding you that you need to consider your IP and take care to make sure it’s recognised, protected, and celebrated…
Recognise it
Chances are, if you’re thinking about selling a company you’ve done some sort of inventory of your assets in order to try and value your business. You’ve probably thought of all the physical things like your equipment, materials, premises, vehicle fleet, and trained staff.
But what about any patents, trademarks, copyrights and trade secrets – A.K.A. your IP? Even if you’re the owner of a small business, this ‘property’ could be one of your biggest assets. A smart buyer will have a nose – and a higher price – for the information, knowledge and expertise that’s made your business so uniquely prosperous.
Aspirational brand? Ground-breaking invention? Coveted logo? You need to identify and understand your IP in order to make it your USP!
Protect it
So, you’ve recognised that you’re sitting on top of the kind of IP that should have eager buyers lining up to offer you a healthy sum for your company? Remember, it’s only your ticket to success if it’s fully protected.
Infringement of IP can cause serious damage to a business, especially if you’re a smaller company that could find yourself up against a larger company with more funds to trample you in a court battle.
If your buyer is a younger investor or less experienced entrepreneur, the prospect of a legal war will scare them off even more. Take out IP insurance to mitigate this risk for you and any future acquirers, alleviating the worry of a larger business stealing your patents, trademarks, copyrights and trade secrets and you not being able to defend yourselves in court.
IP insurance is a form of legal expenses cover that can be purchased for both pursuit and defence costs. This means that, should somebody infringe your IP, you have resources to pursue a claim against that party. Likewise, should somebody claim that you are infringing their IP you have the means to defend your position.
You’ll make your business a much more attractive proposition by taking out this protection before you go to market – thought it is of course advisable in any case. But take note! This is a niche area of law – you need an expert who specialises in IP protection. We are happy to recommend someone from our trusted network of contacts.
Celebrate it
When your IP is your USP (unique selling point), it can give you the opportunity to maximise the value for your business, with confidence. Don’t give it away freely or leave it vulnerable to theft – shout about it and celebrate it!
IP should never be an afterthought when you consider what a fundamental part it plays in the operation of every industry worldwide…
The patent system means that researchers and inventors have the funds and incentive to continue designing what consumers desire – and what they need. With reliable trademark protection and enforcement against counterfeiting and piracy, consumers can then buy those products and services with assurance and satisfaction.
Have you invented something that keeps your customers coming back for more? Is your IP the jewel in your company’s crown? As experienced corporate financial advisors, we can help you market your business for sale in a way that lets the huge potential of your IP shine.
Entrepreneurs Hub is an approachable corporate finance company helping business owners across the UK to sell a business – the smart way. Find out more about our webinars on selling your business for maximum value, or contact us in confidence to discuss how we can help you.
Unprotected IP isn’t the only pitfall to watch out for when you’re selling a company. Learn more by downloading our popular eBook and reading our other blog posts on How to identify your S.P.O.F.s (single points of failure) if you’re selling a company, How to get your contracts in order before you sell a business, and financial areas to address when selling a business.
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FAQs – Selling your company
How do I sell my business?
At Entrepreneurs Hub, we talk about five key areas that make the difference between success and failure when selling your business. Read more…
How much can I sell my business for?
Determining your business’s value is more than just calculating a number it’s complex with key factors, that said the basic equation is actually quite simple. Read more…
How long does it take to sell my business?
The timeline varies depending on the complexity of the deal and how ready the business is for sale. On average, the process takes around twelve months – sometimes less, sometimes more.
While preparing your business for sale, Entrepreneurs Hub conducts in-depth research to identify potential acquirers. You’ll have the opportunity to review and approve this list before we make any approaches. Once the business is fully prepared – often the most time-consuming step, we begin marketing it. Typically, you’ll start seeing initial interest within a few months, with follow-up meetings happening shortly after.
As these meetings progress – coordinated and facilitated by Entrepreneurs Hub, you’ll begin receiving initial offers. At this stage, we’ll help you assess the strategic fit between your business and potential buyers. When you decide to move forward with an offer, an exclusivity period begins, during which the acquirer conducts Due Diligence (DD).
The DD phase typically lasts two to three months, depending on the complexity of your business. Once complete, the sale is finalised, and you’ve successfully sold your company.
How do I sell my business quickly?
Selling a business quickly is possible, but speed shouldn’t come at the expense of value or deal security Read more…
When is the best time to sell?
Selling your business is a major milestone, and the start of an exciting new chapter, whether that means new ventures or a well-earned retirement.
In our experience, the best time to sell is when you don’t need to – when your business is performing well – not necessarily tied to the calendar. That said, timing can still play a role.
Timing the Market
Strong economic conditions, sector growth, and buyer confidence boost valuations. Don’t wait for a “perfect” market – a well-prepared, well-performing business sells in any climate.
Plan Ahead (12–18 Months)
The best outcomes come from early planning: clean financials, solid forecasting and growth potential.
Spring & Autumn Are Active Periods
The M&A market is typically busier in spring and autumn while summer and winter tend to be slower due to holidays and year-end distractions. However, the unpredictability of deals and negotiations makes this hard to target. We do deals all throughout the year – the key is to work with someone who can keep driving the deal forward whenever it happens.
Financial Year- End
Selling your business well is a long process and aiming for your financial year-end milestone is a virtually impossible task. But it is worth bearing your financial year in mind as buyers will want to review the most up-to-date accounts available.
The best time to sell is when your business is ready, and you are too. With the right preparation and positioning the right timing follows naturally.
Can I sell my business online?
Yes, you absolutely can sell a business online. Many platforms specialise in connecting business sellers with buyers. Read more…