Why are IP and data issues now central to corporate transactions, and how can early specialist input prevent value erosion, delay or post-completion risk?
IP and data issues are now central to corporate transactions because they often form a business’ most valuable asset. IP can underpin the goodwill, value and reputation of a business and form its customer-facing elements. Intangible assets are increasingly making up a company’s market value; the World Intellectual Property Organization has published figures demonstrating that intangible assets make up 84% of the total enterprise value of the top 15 firms in the UK. In most transactions a company’s IP can be its most valuable asset and can be the very thing that gives it a competitive advantage. IP can take many forms such as copyright, trademarks, patents, know-how, designs, databases and trade secrets. IP can be the very basis of a company’s brand recognition or underpin its USP which may be protected by trade secrecy and know-how.
Entering a corporate transaction with little awareness of your IP ownership can delay completion, diminish your business’ value and expose you to risk. IP advice should be sought at the inception of a business as well as periodically throughout its growth. Any uncertainty or weaknesses in your IP armoury could result in a diminished value of the business or delays in the deal. It could also expose you to the risk of litigation if you are unable to uphold the warranties you provide or are subsequently found to have breached another’s intellectual property rights
Why IP and Data Matter in Modern Corporate Deals
Why IP and data assets often underpin deal value: Where a business is being sold, its trading ability and market success are often linked with its established branding, website and digital assets. Without clear ownership, a buyer may struggle to resume trading effectively post-completion, including encountering IP issues.
How data compliance and IP ownership affect valuation: Both sellers and buyers benefit from a thorough due diligence process. Buyers can assess risk, and sellers can be aware of the real value of their business and demonstrate a clear and defensible record of their IP. Any uncertainties around ownership create risk.
The risks associated with uncertainties regarding IP ownership include:
- Litigation and payment of damages to wronged parties.
- Subsequent breach of share purchase agreement or asset purchase agreement warranties.
- Loss of crucial IP.
- Reputational harm.
- Discounted value of business or more restrictive and burdensome warranties.
Why these issues are no longer “bolt-ons” to transactions: Ambiguity around IP ownership must be dealt with as soon as possible to enable a smooth and amiable process. IP ownership can have costs and tax implications where royalties may be payable. For businesses whose core offering is software or its value derives from its website, any issues with IP ownership could present a risk to the very functioning of the business.
Identifying Key IP Assets Early in the Deal
What types of IP typically require review? All IP assets of the business require review including branding, websites, software programs, databases, artistic or literary works, know-how, patents and trade secrets. Software in particular carries a greater degree of risk as it often involves multiple developers and may incorporate open source code which is characterised by complications which can create licensing and disclosure obligations. Purchasing a company does not guarantee you will own or be able to use all the IP assets. The engagement of contractors, third parties, and consultants within a company’s operations frequently creates a complex network of rights that needs to be addressed to ensure any warranties are appropriately qualified.
What Red Flags can Derail or Delay a Transaction?
Lack of accurate record keeping and regulatory compliance: It is important for sellers to be able to outline the IP they own and the personal data they hold. Where record-keeping has been sporadic or patchy, buyers are more likely to carry out additional investigations to establish ownership and compliance. This can lead to remedial work such as the drafting of IP assignments or data protection policies, which can delay completion and increase costs. This underscores the importance of accurate record keeping and robust compliance.
The Value of Joined-Up Corporate, IP and Data Advice: A coordinated approach enables all workstreams to review documents in parallel, identify issues early and present a consistent position to the other side. This avoids re‑work, ensures drafting is aligned and helps maintain momentum throughout the transaction.
Whether you are buying or selling, our cross‑disciplinary transactional teams provide clear, aligned advice that protects your position and keeps the deal moving.
Practical Takeaways for In-House Counsel and Deal Teams
Maintain strong records and asset hygiene: Accurate, up‑to‑date records of IP, technology and data assets are essential for deal readiness. Clear documentation enables early identification of ownership, licensing and compliance issues, reducing the risk of delay, remediation or value erosion during due diligence. Robust asset management also supports timetable certainty and smoother negotiations.
Ask the right questions at the outset
Early scoping should establish:
- Which IP and data assets drive value?
- Who owns them and whether rights are properly secured?
- How those assets are used, licensed, transferred or shared?
- Whether any regulatory, contractual or third‑party constraints apply?
This groundwork frames diligence priorities and informs valuation, warranties and transaction planning.
Involve IP and data specialists early: Engaging specialists at the start enables teams to identify compliance gaps, assess licensing and data‑sharing positions, plan for lawful transfers and integration, and ensure operational arrangements can be upheld post‑completion. Early involvement strengthens the deal structure and reduces the likelihood of late‑stage issues impacting price or timing.
If this is something that might affect you or your business then please get in contact with our Intellectual Property and Data Protection team.