Selling Your Intellectual Property
February 27, 2009
We all know ownership succession in business is about understanding the importance of what comes next, so as to maximize owner value, because next counts. When planning your company’s future, it may come as a surprise when I tell you, “Selling your IP (intellectual property) are often the hardest assets to value and are sometimes either minimized or even, overlooked.”
Your IP (Intellectual Property) can include:
- Copyrights
- Trademarks and Service Marks
- Patents and Trade Secrets
Their commercial value can be influenced by the size of the markets and product/service sales related to them, by their age, by how well they are known, by what they “stand for,” by their applicability to other products/services (potential for line extension), among other variables.
Succession Planning and IP:
When working with your succession planner, your accountant and appraisers, ask about the appraiser’s qualifications in regard to valuing IP. It just can’t be valued the same way as you might value real estate, equipment or cash flow. Unless you are comfortable with the appraiser’s approach, ask your succession team leader to get an appraiser steeped in IP valuation. It may cost a little more initially*, but it can pay off in the end, particularly if the IP can make up shortfalls in other asset areas and help the owner(s) receive enough proceeds to maintain lifestyle. Because, as I said at the start – what comes next, counts.
*Some sellers question the value of doing their own valuations in advance of a sale unless the IP value is a significant portion of the selling price. Certainly the buyer will be valuing the IP, along with other assets. Because the buyer has no interest in paying more for your company than required, s/he is likely to “low ball” the IP’s value. Without your own appraisal, you have no way to counter the argument.
Comments
Got something to say?
