Why A Registered Trade Mark Is So Valuable At Sale Time
Selling your business? Regardless of your exit strategy – whether your timeline is still years away or not yet on the radar – there is one key thing you should be doing which could have a significant impact on value of your business and its saleability.
Registering a business name as trade mark is one of the most important things that business owners can do to safeguard their investment and improve their chances when it comes to selling.
Why a trade mark makes a difference to the sale of a business
Firstly, a registered trade mark provides business owners with peace-of-mind that their intellectual property is fully protected from a legal standpoint.
Secondly, a registered trade mark is an asset, which means it can be sold/transferred to others. Having a registered trade mark may allow business owners can use it as a bargaining tool during the sale negotiations. Moreover, potential buyers or investors will have the reassurance that they’ll be acquiring a legally secure asset and will be able to confidently use the mark without fear of infringement.
Jacqui Pryor, an experienced trade marks attorney, has long emphasised the advantages of trade mark registration and how it benefits businesses of all sizes and across all industries. She’s passionate about the topic – and one of her main motivations for establishing her own company, MMW Trademark Services was to make trade mark services affordable and accessible to all businesses, regardless of their size.
Why don’t business owners promote their trade mark when advertising their business for sale?
Entrepreneurship is on the rise and there has been huge growth in the SME sector – with a consequent uptick in the number of small businesses changing hands.
One of the things that Jacqui has noticed about this increased activity in the SME sector is that very few businesses advertising their ‘for sale’ status on various social media and networking channels mention that they have a registered trade mark. Given that a registered trade mark can be such a compelling proposition for a potential buyer, she was curious to find out why business owners weren’t highlighting these assets.
A simple trade mark search confirmed her suspicions that these omissions weren’t simple oversight. It revealed that the vast majority of businesses that were listed for sale did not actually have a registered trade mark. This begs the question, how can a person sell a name to another that they don’t exclusively own nor have registered?
One of the reasons for this could be that business owners aren’t aware that registering a business name does not provide legal protection against any others using the same name – even if it’s in the same trading area and in the same industry! This article provides a good insight into the differences between registering a business name and registering the business name as a trade mark.
What does a trade mark provide?
A registered trade mark offers:
- A way for customers to distinguish a brand from competitors
- Enforceable legal rights
- Legal recourse in the event of infringement and strong defence against allegations of infringement
- Protection against trade mark infringement litigation
Why is a trade mark important at sale time?
Registering a trade mark can be a worthwhile investment for a business generally – and not just at sale time.
Once a trade mark has been registered, no-one else can use that same, or a deceptively similar, mark for the same goods or services that you specified in your application unless certain, limited, circumstances apply. The registered trade mark could be a business name, a logo, a letter, number, phrase, image, packaging, a sound, movement, shape or even smell. That means if someone else infringes your rights or makes an allegation against you for infringement, you have the law on your side.
Having a registered trade mark as part of your asset portfolio gives your company credibility and can also improve business relationships with suppliers, industry bodies etc.
All of these benefits mean that you’re offering ‘peace-of-mind’ to a potential buyer. A business that has a registered trade mark as part of its asset portfolio is likely to be a more attractive investment than one which is vulnerable because it has no legal protection or security. Historical studies have indicated that businesses with registered trade marks are likely to increase in value/sell for higher prices than those that do not have registered trade marks.
If you’re a business owner and want expert advice and assistance with regards to trade mark registration, we can help. Jacqui and the team at MMW Trademark Services are vastly experienced in trade mark law in Australia and further afield, so please contact us for a friendly, obligation-free chat.
Don’t sell yourself short. Have a read through this article on how a trade marks attorney can help maximise the value of your brand and contact MMW Trademark Services today.
