What you need to know about IP before an IPO

On Behalf of | Oct 13, 2021 | IP portfolio management |

There’s a long list of things to do, decisions to make and challenges to meet before a company’s IPO (initial public offering). You will have to resolve any accounting issues, prepare audited financial statements, decide on corporate governance, assemble a team of advisors, attorneys and underwriters, build a board of directors – and the to-do list goes on and on.

As companies approach an IPO, far too often they don’t have an intellectual property strategy or an attorney in place to protect and maximize an IP portfolio holding assets such as patents, trade secrets, trademarks and copyrights.

Easy assumption leaves much undone

It’s easy for firms preparing for an IPO to assume that IP-related due diligence consists simply of making sure that intellectual property assets are owned by the company and have no encumbrances.

What’s left undone is a careful evaluation of the IP portfolio to ensure that its assets align with the company’s post-IPO vision and that IP processes and procedures are in place to develop and protect future products and services.

The absence of an IP strategy

Many experts argue that there should be an IP strategy in place on the day that a company first opens its doors for business. Those plans should be woven into the company’s business strategy. In fact, the absence of an IP strategy that protects present assets and enables development of future assets will be viewed by many potential investors as a company-crippling flaw.

According to the Wall Street Journal, a key IP strategy element is the determination of the specific dollar amount of untapped IP value. That number gives the investment banking world a window into how you plan to convert innovation into revenue.

Capital and insurance

When you understand your company’s IP value, you’re better equipped to lower the cost of capital by presenting a fuller, more compelling case to investors and bankers.

That understanding of IP value can also help you when purchasing insurance to cushion against the financial impact of legal challenges to your intellectual property from competitors or patent trolls. The latter are frequently encountered as IPOs grow nearer.

Firms without an IP strategy and the services of an experienced intellectual property attorney can be especially vulnerable to a publicity-generating IP lawsuit – or the threat of one – that can scuttle what would have otherwise been a successful IPO.