When preparing your company for sale, few areas are more critical — or more misunderstood — than intellectual property (IP).
Your brand, software, trademarks, content, and proprietary processes all represent real value in a transaction. Yet many founders don’t realize their IP portfolio is incomplete, improperly assigned, or inconsistently documented until a buyer’s legal team points it out during due diligence.
That discovery can be costly. Missing or unclear ownership rights can derail negotiations, trigger legal disputes, or force valuation reductions.
At Legacy Advisors, we often tell founders: your IP is only as valuable as your ability to prove you own it.
Why IP Ownership Matters in M&A
Intellectual property is the backbone of many modern businesses — especially those built on software, creative assets, or brand equity. Buyers need to know that every piece of IP they’re acquiring is legally owned, properly protected, and free of disputes.
If ownership is murky — for example, if a contractor created code without an assignment agreement or your logo was designed without a transfer of rights — the buyer is inheriting risk, not value.
In The Entrepreneur’s Exit Playbook, I emphasize that “buyers don’t buy potential — they buy proof.” When your IP is well-organized and properly protected, it gives buyers confidence and strengthens your negotiating leverage.
Common IP and Trademark Issues Found During Diligence
Even sophisticated companies make avoidable IP mistakes. Some of the most common include:
- Unassigned contractor work. Freelancers or outside developers who created assets without signing “work-for-hire” or assignment agreements.
- Trademark inconsistencies. Logos, product names, or slogans not properly registered — or registered under the wrong entity.
- Missing copyright filings. Unfiled content, code, or creative works that lack clear ownership records.
- Overlapping brand names. Conflicts with other companies that can cause legal challenges or rebranding risks.
- Shared or disputed IP. Joint ventures or partnerships where IP ownership was never clearly defined.
- Expired filings. Lapsed renewals or outdated trademark registrations that leave your assets unprotected.
Each of these creates uncertainty for buyers — and in M&A, uncertainty equals discount.
How to Conduct an IP Audit Before Exit
A pre-sale IP audit is the best way to uncover and fix issues before diligence begins. Here’s how to approach it:
1. Inventory all intellectual property.
List every brand, domain, logo, patent, copyright, and software asset your business owns or uses.
2. Confirm ownership.
Check that all IP is registered to the correct legal entity — not a founder, employee, or contractor.
3. Review contracts and assignments.
Verify that all creators, developers, and vendors signed agreements transferring ownership to your company.
4. Check trademark and copyright filings.
Ensure all registrations are current, correctly categorized, and enforceable.
5. Resolve disputes.
If any IP is jointly owned or contested, address it before going to market. Buyers will not close on unresolved ownership issues.
6. Protect your digital assets.
Confirm domain names, social accounts, and software licenses are registered under company control — not personal accounts.
This process can be tedious, but it’s essential. You can’t sell what you can’t prove you own.
Lessons From Experience
When I sold Pepperjam, IP cleanup was a major part of our exit preparation. We verified ownership of every technology asset, documented all contractor work, and ensured our trademarks were properly registered. That preparation paid off — diligence moved quickly, and the buyer’s attorneys had zero concerns about IP validity.
On the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/), Ed and I often discuss deals where founders skipped this step. One client lost six months resolving a trademark dispute that could have been fixed with a $500 filing years earlier. Another had to track down old contractors to sign retroactive IP assignments. Both situations delayed closing and weakened their negotiating position.
The Valuation Advantage
Clean IP equals confidence — and confidence drives valuation.
When buyers see clear, well-documented ownership of all intellectual property, they know they’re purchasing a company with defensible assets. That reduces perceived risk, which often translates into stronger offers and faster closings.
Conversely, when ownership is unclear, buyers either lower their price or demand additional warranties and indemnities to cover potential exposure.
Your goal as a seller is simple: eliminate IP uncertainty before a buyer ever asks.
How to Work with Legal Counsel on IP
You don’t have to navigate this process alone. Partner with an attorney or IP specialist who understands M&A readiness. They can:
- Conduct a full IP audit and verify registrations.
- File or renew missing trademarks and copyrights.
- Draft or update contractor and employment agreements.
- Prepare ownership confirmation letters for the data room.
This proactive investment pays for itself many times over at the closing table.
Final Thoughts
Your intellectual property is one of the most valuable parts of your business — but only if it’s clean, documented, and defensible. Conducting an IP audit before going to market ensures that your creative assets, brand identity, and innovations transfer smoothly to the buyer.
Exits don’t happen when you feel ready — they happen when your business is ready. And readiness means every idea, logo, and piece of code you’ve built truly belongs to you.
Find the Right Partner to Help Sell Your Business
At Legacy Advisors, we help founders prepare for exit by cleaning up IP ownership, resolving trademark issues, and strengthening the value of intangible assets before diligence begins.
Visit legacyadvisors.io to connect with our team, listen to the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/), and explore insights from The Entrepreneur’s Exit Playbook. Together, we’ll ensure your intellectual property adds value — not risk — to your next deal.
Frequently Asked Questions About IP and Trademark Readiness in M&A
Why is intellectual property (IP) such a big deal in M&A transactions?
Because IP often represents a large portion of your company’s total value — especially if you’ve built software, proprietary systems, content, or strong brand equity. Buyers need to know that every trademark, logo, product name, and piece of code they’re acquiring is fully owned and protected. If ownership is unclear or rights aren’t properly assigned, the buyer inherits potential legal and financial risk. In M&A, uncertainty equals discount — which is why a clean IP portfolio is one of the fastest ways to protect and even enhance your valuation.
What are the most common IP and trademark issues uncovered during due diligence?
The biggest issues we see include unassigned contractor work (where freelancers or vendors own rights to code, designs, or content), trademarks registered under the wrong entity, expired filings, and missing copyright registrations. Another common problem is overlapping brand names or trademarks that create legal exposure. Buyers also flag cases where intellectual property is jointly owned or poorly documented. Each of these red flags increases perceived risk — and can delay or even derail a transaction if not resolved in advance.
How can I verify that my company truly owns all of its IP?
Start with an internal IP audit. Make a list of every brand name, logo, software product, patent, creative work, and proprietary process your business uses. Then verify who created it — and whether you have signed “work-for-hire” or IP assignment agreements for each. Check that all registrations are filed under the correct legal entity, not a founder or contractor. If any gaps appear, have your attorney draft retroactive assignments and update filings. The key is to document ownership clearly before buyers start asking questions.
When should I start cleaning up IP ownership and trademark filings before a sale?
Ideally, 12 months before going to market. IP cleanups take time — especially if you need to track down old contractors, file new trademarks, or update registrations. Starting early allows you to complete filings, correct ownership errors, and provide proof of clear title during diligence. Waiting until buyers request documents can cause last-minute scrambling, legal fees, and potential valuation adjustments. Early preparation gives you the leverage and confidence that your IP story is bulletproof.
How can Legacy Advisors help me strengthen my IP position before an exit?
At Legacy Advisors, we help founders conduct pre-sale IP audits, resolve ownership issues, and document their intangible assets for maximum buyer confidence. We collaborate with legal counsel to verify registrations, update filings, and clean up any contractor or trademark discrepancies before diligence begins. Drawing insights from The Entrepreneur’s Exit Playbook and stories shared on the Legacy Advisors Podcast (https://legacyadvisors.io/podcast/), we ensure your intellectual property adds value — not uncertainty — to your exit. When your IP is clean, your deal is stronger.