Selling Your Business’ Intellectual Property

When you sell a business you have a variety of assets you can sell to a potential buyer.  One thing we will look at is intellectual property.  Intellectual property may be written down on documents you have thus you will have something tangible to show the buyer; however, intellectual property will work differently then selling certain assets like inventory in a business.

Intellectual property is not something you have to sell when you hand over a business unless it will directly affect how the company runs.  Let’s take a look at an example to be more specific about this concept.  Intellectual property is something you designed, created, and thought up.  It can be a logo, symbol, or a written work like a book.  In a business when you have intellectual property it generally means you have an idea or concept that is imperative to the running of the business.  You have created a new soap product.  This product is unlike any other on the market because it has a specific ingredient no one else has.  You even patented this idea.  This means you not only have intellectual property, but you also have patent rights that means no one else can produce your product.

You are now looking to get out of your business and the potential buyer will need to secure rights to use your patents.  You could sell the patents to the buyer and draw up an intellectual property agreement that states the new owner can use your information to produce the product, but they cannot sell it, trade it, or own it.  They will also have a specific amount of time they can use the property and patents.  The other option is to sell the patents and therefore the intellectual property completely selling out of the business.  If you keep the rights you can generate income from the use of the patent and intellectual property rights over time.

You will need to check with United Kingdom laws on how best to approach intellectual property sales to determine what your best course of action will be.  With any business sale you will need advisors like a solicitor to help you draw up the paperwork and ensure that everything is legal.  With an intellectual property sale you may also have property, inventory, and other aspects of the business that will go into the process.

There is one more thing to consider when you have intellectual property in a business.  If the concept came from an employee you may have to consider their rights.  Normally there is a document your employee signs stating that intellectual property created for a company is owned by the company and the employee gives up all rights.  However, when you sell a business you may consider offering the employee the intellectual rights or at least an option to purchase the company their intellectual property helped build.  These decisions and many others will affect how you handle your business sale and how you approach the issue of intellectual property.