Several transactions such as the sale, purchase of a business, or financing require a prior due diligence of the intangible assets that a company may possess.
These intangible assets include, among others:
- copyrights, including software;
- patent;
- industrial designs;
- trademark;
- license;
- franchise;
- trade secrets;
- personality rights.
Due diligence helps determine if the company has established and followed policies and methods for the use and protection of its intangible assets.
As examples, such due diligence requires conducting, confirming or verifying:
- a title search, verifying the ownership of the intangible assets the company possesses;
- if there are any intangible assets for which guarantees have been granted or mortgages have been registered;
- if the company has made, when applicable, registrations with competent authorities to protect its interests;
- if licenses have been granted by other companies for the use of its intangible rights;
- if there are any trademarks used by the company that do not belong to it;
- if the contracts signed by employees, freelancers, and executives contain clauses that adequately protect the company;
- if the company can modify its software or update them without obstruction from their creators.
The due diligence of a company's intangible assets confirms that no element is likely to affect the company's business and that the verified elements comply with applicable legislation.
Therefore, before purchasing or financing a company, it is important to consult a specialized notary in order to fully understand what one is acquiring.