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 using a multiple of its profit, usually EBITDA or adjusted net profit. The multiple depends on factors such as growth potential, recurring revenue, customer diversification and management strength. Professional valuation provides a realistic price range and helps position the business effectively for buyers.
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 a business?
Selling a business in the UK typically takes between six and nine months from preparation to completion. The timeline depends on business readiness, buyer demand and the complexity of due diligence. Early preparation and clear financial reporting can help shorten the process.
When is the best time to sell a business?
The best time to sell a business is when it is performing strongly, growth prospects are clear and you are not under pressure to sell.
Business owners often achieve the strongest outcomes when:
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Profits and revenue are growing
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Financial records are clear and well prepared
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There is visible future growth for buyers
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The owner has planned the sale 12–18 months in advance
Market conditions can also influence valuations. Strong buyer demand, sector growth and favourable economic conditions can increase acquisition activity, but a well-prepared business can attract interest in most markets.
Deal activity often increases during spring and autumn, although transactions complete throughout the year. In practice, preparation and business performance usually matter more than trying to perfectly time the market.
Ultimately, the best time to sell is when both the business and the owner are ready, with the company positioned to demonstrate strong value to potential buyers.
Do I need an adviser to sell my business?
Many business owners choose to work with an M&A adviser to manage the sale process. Advisers help value the business, approach qualified buyers confidentially and negotiate terms. This structured approach can increase the likelihood of achieving a higher value and a successful transaction.
How is confidentiality protected during a sale?
Confidentiality is protected through controlled information sharing, anonymous buyer approaches and strict non-disclosure agreements. Potential buyers receive limited information initially and must sign an NDA before any sensitive details are released. Business owners approve prospective buyers and maintain visibility over all documentation throughout the process.
How do I value my business before selling?
Valuing a business before selling usually involves analysing profitability, identifying valuation multiples and assessing key value drivers such as recurring revenue and customer concentration.
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…