Your trademark is a business asset: selling, financing and investor due diligence

Why a trademark counts as an asset

A trademark captures goodwill: the reason a customer picks your product over an identical one with a different name. That goodwill produces revenue year after year, and unlike a patent, a trademark registration can be renewed for as long as the brand is in use. Accountants treat trademarks as intangible assets, and in a sale of a business they are often among the most valuable items on the list.

A registration makes the asset easier to see and transfer. It defines exactly what is owned, by whom and for which goods or services, in a public record anyone can check.

Selling a brand

Trademarks change hands on their own or as part of a business sale. The transfer is done by a written assignment that includes the goodwill the mark represents, and it should be recorded with the USPTO so the public record shows the new owner. Buyers pay for brands that are registered, consistently used and free of disputes, because those are the brands they can safely keep building.

Raising money

Investors and acquirers run due diligence before they commit. Intellectual property is a standard part of that review, and common questions include:

• Does the company, not a founder or a former contractor, own the brand?
• Is the name registered, and for the right goods and services?
• Are maintenance filings up to date?
• Are there conflicting marks, open disputes or demand letters?

Clean answers keep a deal moving. Problems found late can lower a valuation or delay closing while they are fixed.

Borrowing against it

Lenders can take a security interest in trademarks, just as they can in equipment or receivables. Brand-heavy businesses sometimes use their trademarks as part of the collateral for a loan. A registration gives the lender a clear, recorded asset to secure against.

Earning from it directly

The most direct way a trademark produces value outside your own sales is licensing: letting other businesses use your brand in exchange for royalties. Read more in licensing your trademark.

Keeping the asset healthy

• Put it in the right name. The business that controls the brand should own it.
• Use it consistently. Use the mark as registered, on the goods and services listed. Non-use for three years can lead to a presumption of abandonment.
• Keep up maintenance. Missing a required filing cancels the registration, and with it much of the asset’s value.
• Enforce it. Letting look-alikes spread weakens what the name is worth. See how to stop copycats.