Having your trademarks and copyrights in place are one of the least planned elements that increase a business valuation when it comes to selling.
The sale of a business can involve valuing different parts of your business. Your clients, your hard assets and sometimes, any trademarks you have over brand names.
A trademark is a saleable part of your business and is the best protection for your brand. Brand value is a murky part of business valuations and is often called goodwill in accounting circles. Goodwill is the x factor. The reason why someone would pay more for your business over a similar performing one and is often why you see big dollars on business sales in the press.
CFOs and accountants often chose to use a range of forecasting factors to determine what a brand is worth and a trademark is one thing you can do to make sure your business gets the highest valuation possible.
A trademark is about protecting yourself against anyone stealing your brand name and logo and making money from doing so. Here are 3 things a trademark gives a potential buyer of your business.
- Stop others being able to use your brand and trademarks. This gives the purchaser comfort that future cash flow from your brand will flow to them and not someone else.
- It gives them flexibility in their business model as a trademark allows them to grant other parties the right to use your brand or logo.
- If they want to take your business overseas, a Trademark registered in Australia can help establish that the brand is owned to you
Valuing a business is part art and part science. We will usually go through your strategies and work out how much cash flow we think your business is able to generate in the future and applyu a range of methods to work out what that means now.
We do this using tools like discount factors and EBIT multiples. A valuation is increased if we have a reason to decrease the discount factor, or increase the EBIT multiple.
If we know your business name can produce a certain amount of future cash flow and your business name is protected you have a better chance of keeping your valuation up.
Here’s what you can do now to protect your brand and make sure you own your intellectual property.
- Make sure your website is registered in the name of your company
- Register for a Trademark over your company brand name and logo
- Set up Cyber Insurance that protects you against theft of intellectual property online.
A lot of planning is needed when you want to sell your business. Sometimes minor oversights, like now owning your website or having trademarks in place can have a huge impact in getting the valuation you want.