There May Be No Better Time to Sell Your Business

Trump’s Policies will create a wave of business acquisitions.

I predict that mergers and acquisitions (M&As) will skyrocket over the next few years. This prediction is based on several factors. The first is pent-up demand. Under President Biden, M&A slowed considerably, partly due to his executive order calling for greater enforcement of antitrust laws, with the FTC and DOJ following through. There were policy changes and lawsuits, which increased the risk for even normal M&A deals. High interest rates were an added factor, along with the economy in general.

We don’t know what Trump will do, but he is historically pro-business and has promised to reduce regulations and taxes. Looking back at his first year in office, M&A activity was the highest for any president in modern history. If interest rates continue to fall, the cost of doing deals will be lower. The risks of doing deals will be reduced if the FTC and DOJ take a different view on challenging deals. Lower taxes will also free up resources.

What should you do?

If you’re thinking about selling your business then now is the time to prepare. Like selling your house, you want to make it attractive and take care of issues that may raise concerns in the buyer’s mind. Things that aren’t a concern for you may be red flags to a buyer. When we sold our last home, there was a cracked tile on the lanai. It would have been an easy fix, but it didn’t concern me. To my surprise, some buyers read the cracked tile as a sign that the lanai was sinking.

Many business owners are guilty of “one cracked tile”. This is especially true with Intellectual Property. Many business owners put IP on the back burner; important but not urgent, even though they are urgent.

Updating your Intellectual Property Portfolio is a key task in selling your business. Every business has IP, but many don’t realize its importance. Over the last few decades, the value of IP has soared. IP is valuable because of what it protects. For example, your business identity is protected by your trademarks. Having well-known and protected trademarks are important to buyers. Trademarks can be your most valuable asset. In one deal, the buyer pointed to my client’s trademarks as the reason for buying the business and paying a large multiple. Customers knew the brand and its reputation. This was a huge benefit to the buyer.

Patents can give the same comfort to a purchaser. Having a strong patent portfolio protects against competition. It’s like a moat around your products. Patents can also be licensed to generate additional revenue.

Copyrights protect your creativity, such as marketing materials, websites, images, and computer software.

Your trade secrets protect anything valuable that you keep secret, such as business plans, customer research, and processes. They give your business an advantage. Trade secrets are often overlooked, but naming, listing, and promoting them demonstrates their value.

What’s the cost of ignoring your IP?

To sell your business, your IP portfolio needs to be protected. This gives needed assurances to buyers. Many deals have collapsed when IP wasn’t protected. In one deal, the trademarks weren’t registered with the US Trademark Office. Registration gives specific rights that establish strength. The trademarks likely had value, but the buyer was concerned about the strength of the trademarks and walked away. In another deal, software was important, but there was a question of who owned the software. A third party had developed it, and when the purchaser questioned the ownership, the deal collapsed.

You must inventory your business, identify your IP, and protect it. It’s time to take your IP off the backburner and fix any issues, even if you’re not selling. Don’t wait because protection takes time. Registering your trademarks can take a year or more. You don’t want your intellectual property disorganized, unprotected, and creating concerns for buyers.

To get you started, I’ve created a Guide and Checklist. It will walk you through how to locate your IP and what to protect. Click the button below to download a complimentary copy.

About the Author:

Bill Honaker, “The IP Guy” is a former USPTO Examiner, a partner with Dickinson-Wright, and author of the new book, Invisible Assets – How to Maximize the Hidden Value in Your Business.

To get answers to your questions schedule a time to talk, you can access my calendar by clicking here, email Bill@IPGuy.com, or call me at 248-433-7381.