If your end game is to interest an investor in your business or to sell your business, think about putting in place systems now to ensure you achieve the best possible outcome.
Successful sales don’t just happen. As with many things in life, from passing an exam to baking a cake, preparation is everything! Attention to detail will highlight your success not problems. The earlier you get your affairs in order, the easier it will be to maintain your records and be investor/sale ready.
This 2 part blog looks at some of the issues you need to be thinking about now if you want to sell your business or take on an investor in the future. This blog focuses on your most important assets – IP and confidential information. The second blog is about record keeping - I see you yawning but it is important!
IP is the life blood
For most companies, especially those in the technology industry, intellectual property is the foundation of the value of the business. Your ability to show an audit trail of the creation of your IP could be critical to finding an investor or buyer or obtaining the best price.
Some tips to track and protect your IP:
- keep a register of all individuals (employees and contractors) involved in developing your IP and what specifically they have developed - an excel spreadsheet is better than nothing!
- have watertight employment contracts
- get all contractors to assign all IP they create to you in writing
- obtain moral rights consents from all developers
- if you incorporate licensed third party IP (including open source software), keep records of this and the licence agreements applicable
- ensure that any third party licences allow you to commercialise your IP without restrictions
- be aware of any restrictions on the use of the third party IP
- record and register any trade marks you use to differentiate your products or services – make sure you check the availability of a trade mark before you use it to ensure you are not infringing.
Are your secrets safe?
- make sure that any person accessing your IP, confidential or proprietary information (trade secrets) is under strict obligations of non-disclosure that are evidenced in writing. Trying to put these in place retrospectively can be extremely problematic and sends a worrying signal to a potential investor/buyer
- only share company information with a potential investor/buyer once a non-disclosure or confidentiality agreement is in place
- have a clear policy about the proper use of trade secrets and make sure your people are aware of it
- clearly mark information “confidential” when it is
- maintain strict controls over your trade secrets to ensure they are not accessed by unauthorised people or inadvertently disclosed.
Pym’s Technology Lawyers has assisted many companies with preparing for sale and capital raisings including doing due diligence, shareholders’ agreements and IP protection.
Author: Peta Maloney, Director, Pym’s Technology Lawyers. A member of the Panel of Expert Bloggers on commun-iT and an expert on www.aiia.biz.
Disclaimer: This is general information only. It is not legal advice, and is not a substitute for legal advice. Specific advice should be sought to take into account your particular circumstances. Pym’s Technology Lawyers Pty Ltd is a specialist IT and commercial law firm. It has liability limited by a scheme approved under Professional Standards Legislation.