Legal & Intellectual Property Considerations – Installment 1
Let’s start this week with a deep dive into a term that quietly carries significant weight when it comes time to sell your business: Copyright.
Copyright law is often misunderstood as a tool for artists, authors, or musicians. And while it certainly protects creators of those kinds of works, it also plays a pivotal role in business transactions—especially in the context of mergers and acquisitions.
Whether you’re selling a media company, a restaurant with custom branding, or a SaaS business with proprietary code and content, understanding how copyrights function can protect your assets, enhance your valuation, and avoid costly oversights.
What Is a Copyright?
A copyright is a form of legal protection automatically granted to the original creator of an expressive work, such as:
Written content (blogs, ads, company manuals)
Software code
Graphics and logos (yes, some overlap with trademark law here)
Videos and photos
Music or sound design
Unlike patents or trademarks, copyrights are automatically granted the moment a work is fixed in a tangible form—you don’t have to register it to own it, although registration offers critical legal benefits if you ever need to enforce your rights.
How Copyrights Impact M&A
When buying or selling a business, ownership of intellectual property (IP) is a key consideration. Copyrighted material can significantly affect:
Valuation: IP-rich companies are worth more—especially those with custom code, content libraries, branded assets, or training materials.
Due Diligence: Buyers want assurance that the business owns what it claims to. If there’s confusion around copyright ownership (e.g., work-for-hire agreements), it can delay or derail a deal.
Transferability: Not all copyrights are easily transferable. If your business uses third-party content or outsourced creators, documentation is essential.
Risk Assessment: Improper use of copyrighted materials (e.g., unlicensed images, stolen code) could mean lawsuits down the road—an automatic red flag for buyers.
Two Real-World Examples
✅ Success Story: The Content-Rich Consulting Firm
Business Type: A niche consulting firm with a strong online presence and a digital course platform.
The Situation: The owner had spent 7 years building an online training program, publishing weekly blog posts, and creating downloadable resources. Every asset had proper documentation showing the owner was the original creator or had a signed release from third-party contributors.
The Outcome: During the acquisition process, the buyer was impressed by the quality, clarity, and legal ownership of the firm's content library. The clean IP documentation helped justify a 20% premium on valuation and expedited the due diligence process.
💡 Lesson: Well-documented copyrights aren't just legal protection—they're business assets.
⚠️ Cautionary Tale: The Boutique Design Agency
Business Type: A small creative agency specializing in branding and design.
The Situation: The agency had dozens of client projects in its portfolio and several digital products for sale. However, during due diligence, it was revealed that most of the agency’s work had been created by freelancers—and the company never secured written work-for-hire agreements or IP transfers.
The Outcome: The buyer’s legal team flagged this as a significant liability. The deal stalled for weeks and ultimately closed at a lower price—with a portion held in escrow until proper documentation could be secured from each contributor (some of whom were unresponsive or demanded retroactive compensation).
💡 Lesson: If you don’t clearly own it, you can’t confidently sell it.
How to Prepare as a Seller
If you're thinking of selling your business—today or five years from now—here are a few action items to future-proof your copyrights:
Audit Your IP: Identify all creative works tied to your business. Blogs, images, videos, guides, software, product manuals, etc.
Secure Ownership: If you didn’t create it yourself, make sure you have a signed IP transfer or work-for-hire agreement.
Register Key Works: While not required, U.S. Copyright Office registration makes enforcement and ownership transfer easier.
Keep Records: Maintain a clean digital folder of original drafts, dates, and contracts. It'll make due diligence faster and smoother.
Work with Legal: If you’re unclear on copyright status, consult an IP attorney. A few hundred dollars today can save thousands—or a deal—from falling apart.
Final Thought
In the world of business sales, intangibles often carry the most weight. A clean copyright portfolio is like having a clear title on your house—it builds trust, adds value, and smooths the path to closing.
So this week, whether you're building your next e-course or hiring someone to redesign your homepage, ask yourself:Do I own what I’m building? And can I prove it when the time comes to sell?
Stay smart, stay protected—and we’ll see you next Monday with another term that matters.
