Tag archives: intellectual property

Goodwill Hunting: The Value, Protections and Role of Intangible Assets in M&A Transactions

We have previously discussed goodwill as a distinct asset in purchase agreements.  In this post, we explore the growing value of goodwill and other intangible assets in mergers and acquisitions (M&A) and the legal issues parties should consider when seeking to value, protect and exploit these assets.

Intangible assets are often the most significant portion of a target company’s value and goodwill alone can be a very significant portion of a target’s purchase price. For example, in Amazon’s acquisition of Whole Foods, approximately 70% of the purchase price was allocated to goodwill. Although goodwill and intangible assets each … Continue Reading

Uses of blockchain in the M&A process

We have previously explored some potential uses of blockchain in the M&A process. Generally, blockchain refers to a growing list of blocks linked by cryptography. Each block contains a timestamp and a link to the previous block. When a new block is added to the growing list, it is verified by independent parties on the peer-to-peer network and is by design, decentralized and resistant to modification of the data. The possibilities are immense – but ultimately, what are some of the ways that blockchain can help the M&A process?

One key area may be with the use of “smart contracts” … Continue Reading

A-I Captain! Know the legal risks of buying an AI company… or go down with the ship

On February 21, 2019, Blackberry completed its acquisition of Cylance, a privately-held artificial intelligence (AI) and cybersecurity company. Acquisitions of AI companies like Cylance are becoming increasingly common as businesses seek to realize the opportunities in offering much-improved products or services to their customers. Canada, in particular, has become a hotspot for activity in the AI industry.

Acquiring an AI company is not always smooth sailing. There are common risks that buyers must be aware of prior to embarking on an acquisition.

Know where the data comes from

An AI derives its value from data sets used … Continue Reading

Dissecting MedTech M&A deals

As we previously reported, this year has seen a surge in healthcare-related M&A. Many of these transactions are in the medical technology industry, or MedTech. While the industry’s healthy profit margins and opportunities for growth have driven a flurry of activity, the potential for large rewards from MedTech acquisitions also comes with unique obstacles:

  • Regulatory compliance: The healthcare industry is heavily regulated, with recent privacy legislation requiring stricter due diligence practices. Medtech companies often collect sensitive user data and in addition to conducting cybersecurity due diligence, buyers must ensure that the target’s data collection policies and practices
Continue Reading

The tech takeover: disruptive technology as a driver of M&A

A relentless parade of new technologies is unfolding on many fronts – one of which includes the M&A scene. While not every emerging technology will alter a business’ landscape, certain technologies have the potential to disrupt the status quo, alter the way companies operate and rearrange value pools. These “disruptive technologies” can quickly displace established systems and set new industry standards.

As an example, earlier this year, Toronto-Dominion Bank made headlines for its acquisition of “Layer 6 AI”, a start-up company which uses artificial intelligence to analyze various forms of data and anticipate an individual customer’s needs. This announcement came … Continue Reading

Registering and discharging intellectual property security interests

Intellectual property often forms an important part of a target’s assets, especially for start-ups and high-tech companies. It is important for both the purchaser and the vendor to understand the security registration and discharge process in intellectual property assets.

Registration

Pursuant to the provincial Personal Property Security Acts, Intellectual property is considered a type of intangible personal property, and as previously noted in order to perfect a security interest in such intangible property, a secured party must register its security interest at the appropriate personal property security registry in the jurisdiction where the debtor is located .

In addition, a … Continue Reading

IP representations and warranties in tech M&A

When negotiating an M&A deal involving a technology company, parties need to pay particular importance to the representations and warranties regarding the target company’s intellectual property (IP). In a recent Forbes article, “18 Key Issues in Negotiating Merger and Acquisition Agreements for Technology Companies”, Richard Harroch addressed some of the standard issues that come with every deal, such as specific provisions regarding consideration, escrow and holdback periods and representations and warranties regarding financial position of the target company, but also highlighted the importance of careful negotiations relating to the IP of the target company. To facilitate a smooth … Continue Reading

Protecting trade secrets in M&A

Trade secrets and confidential information are a cornerstone to most successful intellectual property strategies.  Trade secrets provide important competitive advantages that augment the profitability and value of a business.  The importance and value of trade secrets have been recently confirmed by substantial damage awards, broad enforcement and the introduction of specific legislative protection in the United States.

In the M&A context, particularly during the negotiation and due diligence phases of an M&A transaction, the disclosure of trade secrets and confidential information can expose the disclosing party to various risks. As such, taking measures to protect confidential information must be a … Continue Reading

IP due diligence: beyond the usual suspects

Conducting a due diligence review of intellectual property (IP) matters as part of a merger or acquisition has become commonplace with the growing importance of commercial IP.  While most lawyers are aware of a general need to protect the more popular forms of intellectual property (patents, copyrights and trademarks) in the course of a transaction, there are a number of specific nuances that should be taken into careful consideration to avoid potentially painful missteps.

Intellectual property rights are intangible rights having no physical characteristics, and are established through the legal frameworks that they operate under. Accordingly, IP rights … Continue Reading

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