Definition: A trademark is any word, phrase, symbol, design, or combination thereof that identifies and distinguishes the source of goods or services of one party from those of others. In other words, it’s your brand’s signature—everything from your logo and tagline to unique product names.
Why Trademarks Matter in M&A
Value Driver: A registered trademark can significantly boost purchase price by signaling exclusivity, goodwill, and customer loyalty.
Due Diligence Red Flag: Inadequate trademark clearance or incomplete registrations often surface during legal due diligence, stalling or even scuttling deals.
Transfer of Rights: Clear ownership and proper assignment of trademarks ensure that the buyer acquires all rights to operate under that brand post-close.
Real-World Success Stories
Nike’s “swoosh” & “Just Do It”
Background: When Nike launched in the 1970s, it invested early in trademarking its iconic swoosh logo and empowering slogan.
Outcome: Those trademarks are now the backbone of Nike’s global valuation—so vital that any merger or joint venture hinges on those protected assets.
Starbucks’ Merchandising Edge
Background: Beyond coffee, Starbucks trademarked its unique beverage names (e.g., “Frappuccino”), store design elements, and even its signature cup silhouette.
Outcome: These registrations allowed Starbucks to expand into consumer-packaged goods and international markets with confidence, making it a much more attractive acquisition target when private equity groups studied its inner value.
A Local Craft Brewery Turns Gold
Background: A Midwestern craft brewery, “Red Barn Ales,” invested in a trademark for its hand-etched barn logo before scaling production.
Outcome: When approached by a regional distributor for acquisition, that registration became a key negotiating point—allowing the founder to secure a 20% premium over initial offers from suitors without trademark protection.
Cautionary Tales: When Trademarks Are Overlooked
The Generic “Multi-Purpose Cleaner”
Story: A small cleaning-products company built solid local sales under the name “Bright & Clean.” With no trademark filed, a national competitor launched a similar “Bright ‘N Clean” product.
Impact: The overlap led to costly rebranding and legal fees—eroding the seller’s margin and forcing the acquirer to reduce its offer price by 15%.
Brewery Rebrand Mid-Sale
Story: A West Coast brewery agreed to be acquired, only to discover post‐offer that its name infringed another regional brewer’s mark.
Impact: The deal was delayed for six months while the seller negotiated a coexistence agreement—and ultimately paid a licensing royalty, reducing deal proceeds by nearly $250K.
Best Practices for Trademarks in M&A
Early Clearance Searches: Run comprehensive searches to uncover conflicting marks in your industry and geography.
Timely Registrations: File in primary markets—and consider international classes if you plan to export or license.
Document Assignments: Keep clear records of any trademark assignments or licenses, including chain-of-title documents.
Include in Data Room: Provide trademark registrations, maintenance certificates, and evidence of use in your M&A data room to streamline due diligence.
Trademarks Are Assets: They often represent a business’s most valuable intangible property.
Due Diligence Focus: Unregistered or incomplete marks are a red flag that can derail or de-rate a deal.
Plan Ahead: Proactively build and protect your trademark portfolio long before you’re “ready to sell.”
Real-World Impact: From global titans like Nike to small craft brewers, trademarks have changed the trajectory—and sale price—of businesses.
By embedding a thoughtful trademark strategy into your exit planning, you’ll safeguard your brand’s value and smooth the path to a successful M&A transaction.
