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. 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 in the UK?
Selling a business in the UK typically involves preparing financial information, obtaining a valuation, identifying suitable buyers and negotiating the terms of a sale. Most owners work with an M&A adviser to manage the process confidentially, approach qualified buyers and maximise the value achieved.
At Entrepreneurs Hub, we talk about five key areas that make the difference between success and failure when selling your business. Read more…
What is my business worth?
A business is typically valued by applying a multiple to its sustainable profit, often EBITDA or adjusted net profit. The appropriate multiple depends on factors including growth, recurring revenue, customer concentration, management strength, owner dependency, market conditions and buyer demand.
Determining what your business is worth involves more than applying a simple formula. Use our Business Valuation Calculator to obtain an initial valuation range, or read our simple business valuation guide to understand the factors buyers consider.
How long does it take to sell a business?
Selling a business in the UK typically takes around 12 to 18 months from initial preparation to completion, although some transactions may be quicker or take longer. The timeline depends on business readiness, buyer demand, deal complexity, due diligence and how quickly the legal terms can be agreed.
Preparing accurate financial information and organising key documents in advance can help reduce avoidable delays. Read our complete business sale timeline to understand what happens at each stage.
When is the best time to sell a business?
The best time to sell a business is usually when it is performing strongly, its future growth is clear and you are not under pressure to complete a sale. Buyers are generally more attracted to businesses with rising or stable profits, reliable financial information and credible opportunities for further growth.
Business owners are often in a stronger position when:
- Revenue and profits are growing or consistently strong
- Financial records are accurate and up to date
- Future growth opportunities can be clearly demonstrated
- The business is not overly dependent on the owner
- There is a capable management team in place
- The owner has started preparing well in advance
Market conditions can also affect buyer appetite and valuation. Factors such as sector growth, access to finance and competition between buyers may support stronger deal activity, but preparation and business performance are usually more important than trying to identify a perfect month to sell.
Ultimately, the best time to sell is when both you and the business are ready, and the company can demonstrate sustainable performance and future value to potential buyers.
Use our Exit Readiness Tool to assess how prepared your business is, or read our guide on when to sell your business for further guidance.
Do I need an adviser to sell my business?
You are not legally required to use an adviser to sell your business, but many owners appoint an experienced M&A adviser to help manage the process. An adviser can prepare the business for sale, identify and approach suitable buyers confidentially, coordinate negotiations and support the transaction through due diligence.
The right adviser can also help create competitive tension, protect your time and reduce the risk of avoidable mistakes. Read our guide to choosing the right business sale adviser to understand the different types of support available.
How do I prepare my business for sale?
Preparing a business for sale involves strengthening its financial performance, reducing risk and making sure it can operate successfully without heavy reliance on the owner. Buyers will also expect accurate financial records, clear contracts, organised documentation and evidence of future growth.
Preparation should ideally begin well before approaching the market, giving you time to address weaknesses that could affect value or delay the transaction. Use our Exit Readiness Tool to assess how prepared your business currently is.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymised buyer approaches and non-disclosure agreements. Potential buyers usually receive limited information at the start of the process and must sign an NDA before commercially sensitive details are released.
Prospective buyers should be assessed before receiving further information, with documents shared gradually according to their level of interest and credibility. A well-managed process also allows the business owner to retain oversight of who is approached and what information is disclosed.
What documents do I need to sell my business?
The documents needed to sell a business commonly include financial accounts, management information, forecasts, customer and supplier contracts, employment records, tax information and evidence of intellectual property ownership.
Buyers may also request details of property, insurance, legal disputes, regulatory matters and company ownership. Organising this information before due diligence begins can reduce delays and help maintain buyer confidence. Our Business Sale Due Diligence Checklist explains the main information buyers are likely to request.
What’s the quickest way to sell a company?
Selling a business quickly is possible, but speed shouldn’t come at the expense of value or deal security Read more…
What’s the best way to sell a business online?
Yes, you absolutely can sell a business online. Many platforms specialise in connecting business sellers with buyers. Read more…
How can I increase the value of my business before selling?
You may be able to increase the value of your business by improving sustainable profits, developing recurring revenue and reducing reliance on individual customers or the owner. Buyers also value capable management teams, reliable financial reporting, scalable operations and clear opportunities for future growth.
The earlier you identify the factors affecting value, the more time you have to make meaningful improvements. Use our Business Valuation Calculator for an initial indication of value and our Exit Readiness Tool to identify areas that may need attention.