Four key considerations before selling off a brand
As businesses increasingly attempt to derive tangible value from legacy intellectual property assets, Emma Green of Bird & Bird provides a guide to the primary questions that should be addressed
In difficult economic times, packaged brand sales are growing in popularity as brand owners assess the value of the legacy brands in their portfolio and take steps to increase revenue. Despite the commercial potential, selling off brands can feel like a daunting prospect: businesses should consider the following.
Will you recommence use?
There is a tendency to hold on to intellectual property (IP) rights ‘just in case’. Some iconic brands do make a comeback, but be objective in your review: if you own a portfolio of legacy brands no longer in use and there is no realistic prospect of use recommencing, that brand might be a good candidate for sale.
Trademark registrations become vulnerable to cancellation after five years, so start by looking at older rights in your portfolio that may be at risk of challenge anyway.
Do you license the brand or sell it off?
A sale is ‘cleaner’ – a one-off fee in return for an assignment of the IP rights to the buyer. There are administrative requirements post sale to make sure the transfer of title is recorded, but this is easy to handle with agreed forms of documents and signatories approved pre completion. You have no control over use of the brand once sold and must also consider the tax implications.
Who do you want to do business with?
Profiling the right buyer helps to maximise profit and address (to some extent) concerns around future use.
Who will the brand appeal to?
Would it work in another territory?
Are there any market segments where you do not want to see the brand used?
IP auctions make it very difficult to control these factors, so working with an agency specialising in brand licensing or asset sales will help to optimise value and provide a greater degree of control in choosing your buyer.
Understand your brand value
Before starting the exercise of looking for a buyer, you need to understand how much the brand is worth. Brand sales can be lucrative, but it is important to get an impartial view, taking into account market factors and the nature of the rights to be sold. Make a list of all the assets you intend to sell and speak to a professional.
“Over the last 30 years, brands and other intellectual property have become some of, if not the most, valuable assets within businesses,” says Richard Haigh of Brand Finance. “Reliable brand valuations prior to the sale of branded businesses or business units can also help to justify higher valuations overall, while the process of conducting a valuation can identify synergies with existing brand portfolios or strategies for managing the brand post acquisition.”