In this video, we talk about the third major asset "WHAT" it is you are actually selling - intellectual property.
As business brokers, we know how important it is to identify, document and protect your intellectual property.
"A business broker is in touch with the market, and we know exactly what excites buyers"
Watch our previous video WHY ARE YOU SELLING PART 2 Plant and Equipment here:
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TRANSCRIPT
When the time comes to sell your business, and as we’ve talked about earlier that time will come at some point, you will be so much better of if you have thought about what it is you are selling.
This week we are talking about intellectual property, what is it in the context of a business sale, and how can you add substantially to its value? So please like and share this, with anyone you know who is a business owner, because actioning this today can make their business so much more valuable.
Most business owners really don’t understand what IP they actually have in their business, in so many cases there is real opportunity for business owners to increase its perceivable value, and therefore overall material value of their business.
IP Australia defines IP as an invention, trade mark, design, brand or the application of your idea. We think this is a great definition, though when thinking about selling your business, or what your business is worth – there is often more depth to IP.
We believe IP is best defined as something unique that is developed within the business, and attributable to generating revenue, or can attribute to generating revenue in the future.
This is the first step in establishing the tangible measurable value of your IP, start by identifying it. So try and think outside the box, what have you developed within your business that could be IP. Then ask yourself, how easy would it be for someone else to reproduce your IP. The easier it is for someone else to reproduce your IP, the lower the IP will be valued.
The second step in increasing its value is to document. A manufacturing process, the design specs of a product, the particular mix of ingredients in a recipe – make sure they exist on paper. This is the essential element of being able to measure the IP and if it is really clearly explained and documented, it can be transferred.
The third step is the most important, it’s to protect. Your IP is so much more valuable if it is safe. Think of who else in or outside your business knows about the IP? A contract supplier, a staff member – what mechanism do you have in place to protect it? Is a trademark or patent necessary?
I have seen the lack of a confidentiality clause in an employment contract be the deal breaker for a Purchaser, who realised the employee that had recently left the business to work in the same industry, could easily reproduce the IP without any recourse, and they then went on to submit a far lower offer.
So when it comes to IP, it’s worth taking a couple of hours to get your ip in order. Remember - Identify, document, protect – it can be worth so much to you when the time comes to sell your business – and try not to wait until you are ready to sell or need to sell, if you do it now you can measure and improve it.
Thanks so much for watching, please like and share this with anyone you know is a business owner. From all of us at Vision Brokers and Advisors, we look forward to working with you. Bye.