The role of trade secrets in business sales

The role of trade secrets in business sales

On Behalf of | Sep 26, 2019 | Sales & Dissolutions |

If you’re looking to sell your business, then you have a lot of work ahead of you. Not only do you have to identify potential buyers, but you also have to secure an accurate valuation of your business so that you can meaningfully engage in the negotiation process.

There are many factors that can play into the value of your business, including property, equipment, and the state of the market. However, you need to make sure that you’re not overlooking intangible assets that significantly contribute to your business, such as trade secrets.

A trade secret is some sort of information or practice owned by a business that gives it a competitive edge in its market. The breadth of protection afforded by trade secrets is pretty large. In fact, anything from methods of distribution to sales tactics and client information can be considered a trade secret.

Therefore, if your business has engaged in extensive research to identify potential clients and engage in targeted marketing based on the demographics of those potential clients, then that information and the process through which it is utilized may be afforded trade secret protection.

If you’re concerned that your business has valuable information but you haven’t taken the steps to seek trade secret protection, there’s no need to worry. Unlike other intellectual property, trade secrets don’t need any sort of registration to receive protection. As a result, the protection afforded to trade secrets can be indefinite.

However, in order to maintain trade secret protection, the business must be kept a secret, it must have commercial value, and the owner of the secret must take steps to ensure that it remains a secret.

Trade secrets can be quite valuable. Therefore, they can attract potential buyers and increase the purchase price of a business. Valuing a trade secret can be challenging, though, and it only makes up a portion of the negotiations that often take place when a business is bought or sold. This is why those looking to engage in one of these transactions should think carefully about securing the assistance of a qualified legal professional before moving forward.