Even though mergers and acquisitions (M&A) is a broad category for any type of financial transaction resulting in the consolidation of companies or assets, its impact is readily discernable in the economic value it creates through more efficient allocation of corporate resources.
Understandably, M&A activity often rises in a distressed economy, when many acquisition targets face strong headwinds and seek shelter by consolidating, yet the COVID-19 pandemic has not spurred the great number of M&As that this pattern would predict. A recent analysis by business advisors with Deloitte indicates that the high level of economic uncertainty created by the pandemic, combined with government support for many smaller companies over the past year, has kept M&A activity lower than expected in many areas of the world.
However, some academics believe that a once-in-a-generation wave of M&As may be rapidly approaching this year as government support begins to dwindle. Further, with COVID-19 vaccines being administered in many countries and companies preparing themselves for a post-COVID normal, confidence is being restored in badly hit sectors of the economy, which may provide an impetus for consolidations.
IP recordals - a tedious task protecting the most valuable assets in mergers
While mergers involving major industry players make headlines for the large amounts of value that they generate, the foundation of these huge transactions involves plenty of minor tasks necessary to prevent major liabilities. Nowhere is this more applicable than in the realm of Intellectual Property (IP) recordals. Every time an individual IP asset changes corporate ownership, the IP office for the country in which a particular asset is registered needs to be informed of the changes of the new owner's name and address, as well as several other details. Though IP recordals are procedural tasks and not substantive attorney work, if done improperly, loss of property rights and increased legal liability can result.
Factor in the reality that many acquisition targets have large IP asset portfolios that may include registrations with multiple foreign IP offices, and the amount of work involved in IP recordals following M&A can seem daunting. That is why the team of IP recordal agents at Dennemeyer handles outsourced IP recordal work for many clients worldwide. With over 55 years of experience in the field and a global team of agents, Dennemeyer has the resources your company needs to stay on track in the fast-paced world of business mergers.
The COVID-19 pandemic has kept M&A activity lower than expected, but some believe that a wave of M&As may be rapidly approaching this year.
There are several advantages to working with Dennemeyer as it is a firm that provides comprehensive IP expertise and has a division dedicated to ensuring the proper filing and processing of IP recordal documents. It is of the utmost importance that our clients can access various services and our global team of agents through a single point of contact. Instead of working with different IP management firms in geographically diverse locations, our clients are able to take care of their recordal tasks worldwide while paying a single invoice. Our single English-language gateway reduces communication time and efforts for clients while also providing access to both the knowledge of acceptable filing timeframes for recordal documents and the superior proficiency to satisfy filing targets. Dennemeyer's clients also benefit from increased value through pre-negotiated rates and volume discounts that keep IP recordal services costs low.
New corporate merger forms still require maintaining proper IP asset ownership data
Proper attention to detail may be one of the least exciting aspects of business mergers, but it is becoming more crucial for two reasons. Firstly, M&A activity looks primed to accelerate soon, and secondly, new forms of corporate mergers are coming to the fore. Over the past few years, special purpose acquisition companies (SPACs) have become a significant trend, enabling investors to raise money in initial public offerings (IPOs) to purchase an acquisition target.
During 2020, about 200 SPACs went through an IPO, raising about $64 billion of total investor funds. SPACs themselves do not provide goods or services, but rather exist to collect funds for target acquisition, even though many investors may not know initially what company is targeted for acquisition. While this novel form of corporate structure helps institutional investors build more support for non-traditional companies and reduces the amount of paperwork required to take an operating company public, it still requires the input of IP executives to ensure the proper owner is identified on each registered IP asset in order to keep them active and enforceable.
Many acquisition targets have large IP asset portfolios that may include registrations with multiple foreign IP offices, making the amount of work involved in IP recordals following M&A seem daunting.
Properly handling your company's IP recordals through the M&A process involves more than correcting registration information at individual IP offices. Other government agencies need to be made aware of an IP asset's ownership changes to ensure proper enforcement of IP rights. For example, failing to file notice of an ownership change for an IP asset with a foreign customs office may lead customs agents to believe that your legitimate imports are actually counterfeited, violating the trademark's IP rights or copyright's prior owner. If IP assets are transferred in a merger while they are involved in ongoing litigation, courts may require quick processing of IP recordals to eliminate any procedural problems.
Companies of all sizes make substantial investments into registering and maintaining their IP assets, and that investment deserves to be protected. In the world of M&A, these IP assets are critical as they often protect the intangible assets which made the target company a strong choice for acquisition in the first place. Usually, the costs involved with IP recordals in response to M&A activity can surprise corporate executives. That is to say, although the work mainly consists of changing owner designations on IP registrations, costs can quickly accrue by paying for translation services, agent fees in different countries, notarization services and more.
Any company that has undergone a merger in recent years knows that there is strength in size and that larger corporations can often reach more consumers with fewer supply chain costs. Here at Dennemeyer, our global work chain efficiencies allow us to pass cost reductions directly to our clients. For a thorough consultation of how Dennemeyer's Recordals service can keep your IP assets afloat during the merger process, contact us today.
The authors contribute to this blog in their personal capacity. The views expressed are their own and do not necessarily represent the views of Dennemeyer IP Solutions, Dennemeyer & Associates, or Dennemeyer Consulting.