If you are considering a merger, you will likely review assets such as real estate, equipment, inventory and financial accounts. However, some of your most valuable business assets may not exist in physical form.
Intellectual property (IP) can be a valuable business asset. Throughout a merger, IP can affect both value and ownership. Trademarks, customer databases, software and trade secrets can all affect the deal.
Intellectual property assets often hidden in plain sight
Some IP assets help your business run every day, even if you rarely think about them. During a merger, IP may support your business in several ways:
- Protecting your business name through trademark rights
- Maintaining customer lists built over many years
- Using software that supports daily work
- Creating marketing materials associated with your brand
- Managing websites and domain names connected to your company
- Protecting trade secrets that help the business compete
These assets can help bring in revenue, retain customers and support daily work. As a result, they may affect how the parties view the business.
Determining who actually owns the IP
Questions about ownership can arise when a family business develops IP over time. For example, a founder may register a trademark personally instead of through the business entity. In another case, a family member may create software or marketing materials without transferring ownership to the company.
During a merger, the parties may need to confirm that the business owns the IP it uses every day. If ownership records do not match day-to-day use, questions about transfer rights and control may arise.
Merging brands and preserving goodwill
If your family business has operated for many years, customers may recognize and trust your brand. When two businesses merge, branding decisions can affect how customers view the new company.
The parties may decide to continue using both brands, retire one brand or adopt a new name. Trademark rights, customer loyalty and reputation can all shape those discussions. The outcome may affect the company’s goodwill and the strength of its brand..
How IP fits into long-term succession planning
Some family business mergers happen as a family prepares to pass ownership to the next generation. You may merge related companies before retirement, prepare for the next generation or simplify a family business structure.
In those situations, intellectual property remains part of the business. Trademarks, trade secrets, software and similar assets may need separate review when ownership changes. If succession planning is part of the merger, IP may affect who owns and runs the business in the future.