In the rush to close M&A transactions, organizations can risk loss of IP value or even IP rights. Read to find out more about these IP risks.
Global merger and acquisition (M&A) activity set new records in 2021, as volumes reached $5.8 trillion—a 64% increase over the previous year. While M&A transactions have become a cornerstone of corporate growth strategies, they can be disruptive to the intellectual property (IP) portfolios of the companies involved. In the rush to put together deals, organizations sometimes fail to give IP assets the attention they deserve—risking loss of IP value or even loss of IP rights.
How valuable are those IP rights? Recent data suggests that intangible assets, including patents and brands, comprise more than 90% of the S&P Top 500’s total assets. Given this finding, ensuring the integrity and effective integration of these portfolios must be a priority throughout the M&A process.
The risks are real
Failing to devote proper attention to IP due diligence can present critical risks at every step:
Lack of visibility of the rights owned by the acquired or merging company can lead to losing those rights. Similarly, uncertainty regarding the value or strength associated with transferred IP can lead to litigation or missed monetization opportunities.
These risks are not hypothetical. A well-known case study is that of Volkswagen, which acquired the Rolls-Royce Motor Cars business in 1998. However, the coveted Rolls-Royce trademark was owned by Rolls-Royce PLC, a separate company, which was acquired by BMW. So, while Volkswagen could produce Rolls-Royce cars, they could not brand them as such. Ultimately, Volkswagen settled with BMW to use the Bentley brand but they missed out on perhaps the most valuable asset: the brand equity associated with the Rolls-Royce name.
Integrating the IP portfolio of an acquired or merged entity can be a burdensome task demanding significant time and resources. Making sure nothing “falls through the cracks” is crucial to avoid a loss of patent or trademark rights.
If the acquired or merged entity uses a different IP management system (IPMS), this can make the integration process even more complex. Lack of familiarity with the other entity’s system can cause delays and, potentially, errors as data is migrated from one IPMS to another.
Following the completion of the transaction, updating ownership details—known as recordals—is essential to ensure the transfer of IP assets. For global portfolios, this may involve regulations and timetables that differ from one jurisdiction to another. If deadlines are missed, companies may incur unplanned costs and even, potentially, loss of IP rights across jurisdictions.
Expert help is at hand
Given these risks, managing IP due diligence and integration for M&A transactions requires careful attention and specialized expertise. Clarivate can provide both.
Clarivate provides a full suite of M&A IP services to support corporations and law firms. We serve as your trusted partner throughout the M&A process, helping you to understand the strength of your acquired IP assets and ensure your new rights are maintained through the transfer process.
Entrusting your IP due diligence to Clarivate frees your in-house team to focus on core business activities, while meeting deadlines for completing key transaction milestones. We combine manual and automated processes, backed by industry-leading IP data, to support seamless portfolio acquisition—quickly and cost-effectively.
With Clarivate on your team, you benefit from our decades of experience managing every aspect of IP, supported by knowledge and data resources that many of the world’s leading brands rely on to make critical business decisions.
M&A transactions are critical inflection points for business success. Having an IP expert in your corner throughout the journey can be the key to maximizing the value of your deal.