The role of intangible assets in the company`s work 

Kirill L. (his real name was changed to preserve the confidentiality of the client) bought a Caribbean cruise company.

One of the factors that prompted his purchase was the high profile of this company. The phone in the office rang constantly and buyers were eager to book new tours.

Kirill was surprised when the phone went silent on the second day after the purchase. He discovered that the phone numbers that were in the advertising materials belonged to the company's manager. The manager flatly refused to give the numbers to the new owner, justifying this breach with a claim that he receives personal calls on these phone numbers. The transfer of critical business phone numbers was not explicitly stipulated in the contract; moreover, under the contract, the manager wasn`t obliged to provide them.

With this shocking development, Kirill tore out the remaining hair on his head and thought with horror what the future would hold for his business.

The main problem is that people buying a business fix their attention only on tangible assets. They constantly ask what they are buying, and they want to see it and touch it.

Generally, a business is an invisible customer acquisition mechanism. The seller may even not own tangible assets at all and yet be super profitable. This invisible mechanism is the main intangible asset that should be in the buyer’s focus.

Therefore, the sequence of actions for verification should be as follows:

  1. Before an offer is made, research should be conducted on open sources of intangible assets to identify all marketing channels: phone numbers, website addresses, social media profiles, all emails, graphic advertising materials (such as a logo), all registered trade brands, and similar assets. When composing a proposal, it is necessary to spell out each item explicitly. Read more about how to write an offer in our article.
  2. During verification, you must make sure that the company owns the resources. As sad experience shows, the owner can be someone completely extraneous. The seller will have to solve this problem before closing the deal.
  3. It would be helpful to research trademark infringement. The seller must sign a statement that he didn`t receive any claims from the brand owners at the time of the sale. You should also do your own legal search on the trademark registry called uspto.gov.
  4. You need to make a list of every intangible asset and resources that needs to be changed over. All ownership must be transferred to the business. On closing day, be sure all resources are transferred.

Sellers often behave differently on the closing day. Of course, they rarely fulfill this list. But there are two scenarios for their behavior. Some say, "I will do everything, change everything." Here it is necessary to assess whether they can do this. If the asset is assigned to a manager, there will be no control over what is happening. The second option - they can resist and say: "I will not do anything, take it as it is." Both scenarios are bad. The first one is solved because the seller offered to keep some of the sale money in the escrow account until he fixes any shortcomings. The second situation depends on how much you depend on this deal. If you are on the verge of deportation, then this is one thing. If you can switch to an alternative purchase, that is completely different. Read about his role in buying a business here.

For a better understanding of how to behave when someone uses take it-or-leave it tactics on you, explore our CLASS Negotiating.

What is important to remember:

Проверка нематериальных активов на что обращать внимание 3

  • Intangible assets are more important than tangible ones.
  • To avoid the loss of intangible assets, it is necessary to conduct their complete inventory and include this list in the contract. Who can help you with the verification, read the article "Who checks the business."
  • It is necessary to scrupulously check the ownership rights of intangible assets.
  • Make sure that on the closing day you receive all the "keys" to intangible assets.

The most important thing: On the closing day, a list of intangible assets accompanied by logins and passwords must be physically present. Otherwise, the seller may simply refuse to provide them after making the deal, thereby putting the buyer in an almost hopeless situation.

Take a quick look at our Business Due Diligence class to be fully equipped when it comes time to review employees.

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