It’s Business, And It’s Personal

Valuation of intellectual property important in a business’ sale

On Behalf of | Apr 30, 2018 | Buying & Selling Businesses |

Selling a business is a complex undertaking. The person who is selling the business has to try to make a little money, and the individual who is purchasing it likely wants to get a good deal. One thing that can make selling a business more complicated is when there is intellectual property involved.

The valuation of that intellectual property is important since it can impact the sale price of the business. Since this business asset isn’t tangible, it is hard to value. There are two categories that come into the picture when trying to determine what value should be placed on intellectual property.

The actual cost incurred to create the asset is important. This can include the money paid to designers and for filing for patents or registrations. It might also include the cost of prototypes and product trials. Regulatory approval can also fall into this category as can payments for materials and utilities used to create the design or product.

The second category of value moves beyond the actual costs for the intellectual property. The economic benefits of the property, which can impact the value, depend on several factors. The overall market, the health of the company and the type of competition are a few that are important. It can be hard to put a value on these, so many business owners or potential buyers will need to work with someone who’s familiar with intellectual property valuation to come up with a figure.

When people are buying and selling businesses, they must protect their interests. Taking a comprehensive look at the situation can help everyone involved to make informed decisions. Experienced attorneys can guide individuals through each step that’s involved with buying or selling a company.