Skiing down to the bottom of a slope may be a nice recreation, but it won’t earn you any medals in the competitive arena. Miss one gate, and you’re out of contention. Competition is fierce, leaving little room for mistakes. Adeptly traversing the gates of the course smoothly on your edges without lagging or snagging a pole is the difference between the winner’s circle and the “what could have been” stories left for the ski lodge.
In many business transactions, an evaluation into the details of a potential investment or purchase is performed by verifying each and every aspect relevant to the investment or purchase, a process that is generally referred to as “due diligence.” Intellectual property firms specialize in such activities. Typically, due diligence is keen on discovering red flags early; however, it is often the more subtle issues that gradually emerge, or surprises that suddenly arise, that tend to be the most problematic on the roadmap for an IP strategy. If all issues can be successfully maneuvered, deal execution can yield incredible opportunities and returns. But, a snag that was missed or unanticipated can wipe out an entire strategic plan.
While due diligence can be a legal obligation, it is commonly exercised voluntarily. In many industries, it is common for a potential purchaser to perform due diligence by evaluating a target company or its assets for acquisition. The due diligence process can include investigations in different realms regarding a prospective transaction. Investigations of finances, macro-environment, and legal status, as well as marketing efforts, operations, and management are among the evaluations carried out under due diligence.
When it comes to intellectual property, due diligence is an essential prerequisite for any technology-based acquisition. Factors such as validity, ownership, freedom-to-operate, and enforceability need to be assessed for patents, as well as substantiation of trademark rights that are in force to obtain a clear picture of the IP strategy. In many instances, this part of the process will rely heavily on the content of various legal opinions and patent analysis.
Due diligence also investigates third-party interests (such as licenses), outstanding or due payments, and the remaining life of the IP rights. Critical to the process, but often not assessed adequately, is determining an accurate valuation of an IP portfolio. Valuations are the central motivation for the entire due-diligence activity (such as for sales and M&As). However, IP valuation is frequently factored into the business-model assessment as a generic parameter (such as strong or moderate IP) without quantifying the risks in each aspect of the IP.
FlashPoint IP, a leader among intellectual property firms, endeavors in this regard to provide an enlightened perspective for its clients to move forward with business ventures with the assurance of being well-informed. FPIP strives to implement these diverse issues into a unified framework, using patent analysis in a business context. Our engagement managers are adept at synthesizing the many facets needed to create a winning formula for your IP. Contact us to discuss your options regarding IP strategy and positioning, and how best to advance your business interests.
