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  • Daniel Rodriguez

How to deal with intellectual property rights

Intellectual property may be one of the most valuable assets that a California company might own. Therefore, it’s important to verify exactly what you are getting when acquiring another business. If you are the one selling intellectual property, it’s important to know how to properly value it.

If you’re acquiring intellectual property

If you are acquiring a company’s intellectual property, it’s critical to do due diligence before the transaction closes. This will help you determine if there are outside rights holders and if they need to be compensated. Performing due diligence may also enable you to determine if rights are held or stored in more than one jurisdiction. If so, it may be best to consolidate them to one location after a sale is finalized. Taking this step may make it easier to manage and defend any intellectual property rights acquired in a transaction.

If you’re transferring intellectual property

Transferring intellectual property rights during the mergers and acquisitions process can result in a number of tax and accounting questions. For instance, assets are generally appraised at their fair market value before tax. However, for accounting purposes, they are appraised before taking taxes into consideration. If mistakes are made, you could be audited or face other negative consequences, and it’s also possible that you’ll undervalue something that makes up a significant portion of your company’s sale price.

A purchase or merger is often a complex event even for those who have gone through the process before. Therefore, it may be in your best interest to have a team of professionals who can help with the accounting, tax and other issues that might come up before a transaction closes.

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