To put this in another way, it’s extremely important that you understand whether the company you’re acquiring may be infringing on another company’s intellectual property and that in order to conduct business, the company isn’t impinging in any way on another company’s intellectual property. There is another reason why intellectual property due diligence is important: The IP that the target company does not possess may be as telling as that which it does. To paraphrase Warren Buffett, Coca-Cola’s major shareholder: the company’s intellectual property portfolio creates a drawbridge around its future cash flows. ![]() There’s the unmistakable branding, the formula, and even the bottle.Īll are part of Coca-Cola’s intellectual property portfolio and are worth billions of dollars each. ![]() Water and sugar alone were not responsible for making Coca-Cola trillions of dollars. This is as true for non-technology firms as it is for technology firms. Many companies’ long-term value is often intricately associated with them being able to maintain market power through the uniqueness and safety of their technology IP, so arriving at a good value demands a good valuation of the target’s IP portfolio. ![]() Intellectual property (IP) due diligence is important because a buyer cannot accurately evaluate a target company’s technology offering without fully understanding the intellectual property that underpins it. Why is Intellectual Property Due Diligence Important?
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