By Mark Seavy

Intellectual property (IP) is rising in importance amid a sea of mergers and acquisitions (M&A).

While many companies remain focused on core businesses for M&A, greater attention is being given to intangible assets that include IP, like patents and brands, according to attorneys at the recent International Trademark Association (INTA) conference in New York.

While it is growing in importance, IP still remains far from a top priority in many M&A deals. In fact, IP attorneys often aren’t consulted until a potential deal has been drawn up and nears closing. But IP aspects like minimum guaranteed royalty payments and recurring revenue have become more alluring to the teams making these deals, attorneys at the conference said.

“M&A is shifting toward technology, brands, life sciences, content, and advanced manufacturing, and that means it is moving toward IP-intensive industries,” INTA CEO Etienne Sanz de Acedo said. “The deals are being done not just to make companies big but rather for strategic reasons and that means IP attorneys should not be at the margins of these transactions but rather at the center. There is a need to speak the language of value and not just the validity of ownership.”

The value of IP depends on where it resides within a company. In the case of traditional media, much of the business revolves around IP, attorneys said. But in the content creator category, talent is central to the business. In many cases, creators’ brand and their ability to communicate it with their followers is as important as any digital technology they might bring to a deal. And in the case of many companies, the software coding an acquisition might bring is sometimes more important than the patents that come along with it, attorneys said.

For example, Barstool Sports’ licensing deal with the brewery Labatt USA to create Big Deal Brewing Original Golden Ale with its hockey podcast “Spittin Chiclets” ended in 2024, two years after it launched. The link to bigdealbrewing.com now leads to an advertisement for Labatt Blue. But Barstool also has agreements with DraftKings and with Virtual Dining Concepts (VDC) for the “Pardon My Cheesesteak” podcast. VDC claims 1,600 virtual Pardon My Cheesesteak locations in the form of “ghost” kitchens that prepare orders in other restaurants.

“People are starting to realize that the licensing business isn’t risky with the minimum royalty payments and IP has independent value,” said Alan Kravetz, CEO at the brand management firm Full Sail IP Partners, which owns the Weatherbeater and Odwalla brands and recently sold the Revere Ware label to Acuity Management. “They are starting to understand that if a company like Apple went away tomorrow, there are other companies that would be in line to pay money for their trademarks. In that case, Apple’s IP is almost equal to the value of the company.”

But it can be complicated to accurately calculate that value, attorneys said.

The fashion firm Steve Madden acquired Betsey Johnson’s label and designs in 2010, along with a bevy of trademarks. To boost the brand, which had about 65 stores in the mid-2000s, Madden opened a temporary pop-up store in New York’s Sono neighborhood but doesn’t have plans for other standalone locations, according to Lisa Keith, EVP and General Counsel at Steve Madden. Madden’s 2014 acquisition of the fashion label Dolce Vita (footwear, handbags), which has five full-price stores, had fewer trademarks given the widespread use of the “dolce vita” phrase, Keith said.

The struggle with IP in M&A is that, while the property as an intangible asset can be a large part of a business’ value, it often isn’t measured and managed with the same rigor as the core operations, said Brian Buss, Managing Director at the law firm GlassRatner. This is in part because the IP attorneys at companies are typically involved in major deals, but less so in smaller ones, attorneys said.

“It is an ongoing challenge, and I still don’t really see the deal team even though we try to build an ongoing relationship to recognize that we [IP attorneys] add value,” said Linhda Nguyen, Deputy General Counsel for Intellectual Property at UnitedHealth Group USA. “Many times, they are trying to close the deal quickly and having to engage another team really does slow down the process. It is about us continuing to make the offer [to provide assistance].”