Prepping for Financing or Acquisition: What Investors and Acquirers Will Want to Know About Your IP Assets

September 3, 2020

If you anticipate that one day your company will seek financing or get acquired, it pays to have a solid understanding of your IP assets. Smart investors and acquirers know that a tremendous amount of a company’s value lies in its IP and will ask what IP rights you hold and how those rights are protected. If you wait until an investor or an acquisition deal is on your doorstep to get a handle on your IP, the investor or acquirer may be turned off by your lack of preparation. Conversely, if you have spent the time to identify, protect, and catalog your IP assets in advance, your business will look attractive when opportunities come knocking.

As part of the due diligence that takes place when a company considers investing in or acquiring an early-stage company, “disclosure schedules” are prepared which include, among other things, a listing of the early-stage company’s important contracts and intellectual property, and a listing of exceptions or qualifications to the representations and warranties required of the early-stage company in the financing or acquisition agreement.

To make sure your company knows what it has and is well-prepared to assemble a thorough disclosure schedule when the need arises, it is a good idea to keep detailed records relating to:

• Your IP assets including patents and patent applications (including all related information such as patent numbers, issue dates, etc.); trademarks and services marks (and related registration information); key trade secrets and proprietary know-how; domain names; and social media accounts
• All technology licenses, including licenses from third-parties to your company and licenses of technology from your company to third parties
• Any open source software used in or used to create your company’s products and services
• Any cease-and-desist letters, claims of IP infringement, or notices of litigation your company receives
• Any liens or encumberances on company IP
• All IP assignment agreements; including assignments of IP created by founders, employees, and contractors.

By taking these simple steps, you can assure investors and acquirers that the value placed on your IP is well-supported.

Disclaimer

The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this website or any of the e-mail links contained within the site do not create an attorney-client relationship between CGL and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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