Intellectual Property in M&A

When carrying out a merger or acquisition, there is no doubt that adequate valuation and financial factors are essential to reach a fair agreement between the parties. Regarding the valuation, on numerous occasions, we have found that in the balance of assets, the rights related to intellectual property and its transferability have a strong weight, and even in some transactions, they turn out to be the determining factor behind the interest of the acquirer.

When conducting due diligence prior to closing a merger or acquisition, the time and dedication spent looking at patents, copyrights, trademarks, and other IP assets cannot be neglected, as failure to examine these will likely result in an erroneous valuation and/or revaluation and other structural changes to the closing documents, the latter resulting in wasted time and unnecessary expenses. Likewise, due diligence in this sense will allow timely negotiation of strategies for ownership transfers and their terms.

Now, the listing of IP assets by the seller is helpful as a guide for due diligence, but it is not enough, it must be the basis to be able to investigate, know in detail and validate the situation and scope of each of the assets, including their expiration, jurisdiction, and pending requests. The importance of validation in this sense has been taken more seriously by companies and external consultants, and for this reason, it has also been possible to realize that there are related complexities and that it is necessary to have a highly prepared team to face the same in the different stages of review.

Among the elements to be considered in the review stages, the background must be considered, involving, among other issues, the components of each right, creators or authors, current owners, licensees, modifications in substance and ownership, and registration status. It should be considered that a merely current approach to IP rights is not enough, but rather, considering that there are technological and technical elements behind, the investigation shall be carried out from its creation and registration, ensuring that all formalities required by law are complied with.

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