Quickfire strategies to skyrocket the value of your business

Bread & Jam Festival 2024 saw me join an insightful panel discussion chaired by Harry Turpin from The Savourists which provides delicious healthy snacks. Also on the panel providing expert insight were Julie Waddel from Moorish, whose houmous brand was acquired by Bakkavor in March this year, and also corporate solicitor Paul Chiappe, managing partner at Joelson with 25 years of experience in working with food and drink businesses.

The panel discussion navigated the complexities of funding, growth, and exit strategies, sharing tips to avoid pitfalls and to maximise opportunities.

When it comes to putting your business in the best position to maximise investment or to secure a successful exit, there are several issues to consider on the IP (intellectual property) side.

How can you build your exit into the early stages of your business? How can you maximise value on a limited budget, and what can you do to make a big impact? It is essential to understand the role of IP, how to secure trading partners and the agreements you need to have in place to win big when you’re seeking investment or selling. Our recommendations are set out below.

Building an exit strategy from the start

When it comes to maximising investment or securing a lucrative exit, it is essential to incorporate exit planning into the early stages of your business. This involves aligning your IP strategy with your overall business strategy, ensuring that the two work in tandem to create a compelling proposition for investors or buyers.

Although all of the IP issues will not likely be resolved at the outset, there should be a document that sets out a clear strategy. This gives the investor confidence in you by showing that there is a plan in place and that any potential issues can be addressed.

Establish IP ownership and control

Maintaining control over your brand and IP is crucial. Ensure that all new IP created, whether through in-house efforts or external contractors, is owned by the business. When an external contractor creates a website or designs new packaging, they will own the IP unless there is a document that says otherwise. Address that early to prevent any potential ownership disputes down the line, which could derail a deal or significantly impact the valuation.

Your trade marks should be centrally owned by the business and sit in the correct name. This will help with enforcement, securing investment and exiting. Investors and purchasers will want the IP to be in the name of the company rather than in a personal name, otherwise there is nothing to stop that person from walking away with it.

Ensuring freedom to operate

Potential investors and acquirers will want to see that your business has the freedom to operate in your target markets. Conduct thorough trade mark searches to identify any potential conflicts or third-party rights that could hinder your expansion or create legal challenges.

Think about the business plan. Make sure there is freedom to operate in the key markets that you have identified. If someone else has conflicting earlier rights, then they could prevent your continued use (including manufacture) in that market with an infringement action. This sort of risk is a red flag to an investor or purchaser and can be fatal to any deal, or at least seriously devalue the business.

Prioritise trade mark registration

Your trade marks are the foundation of your brand identity and a key asset that investors and acquirers will scrutinise. Register your trade marks early, both domestically and in key international markets, to solidify your ownership and prevent third parties from potentially claiming rights over your brand.

A business with brands that are registrable trade marks is more attractive to investors and acquirers because that business has a greater growth potential. A trade mark that is distinctive and not descriptive can be registered and which helps to maintain the market position, since it can be used to challenge third parties using or applying to register something similar for a similar product.

In many countries, unregistered rights are given little, if any, weight, so in the absence of a trade mark registration, it is very difficult to prevent a third party from using or applying to register an identical or similar name for an identical or similar product. You may then have to buy back your own trade mark at a high cost.

When filing, also look ahead and future-proof new product developments by using a suitably broad specification of goods. Once an application is filed, new goods cannot be added to the specification. Instead, a new ‘top up’ application is required, adding to costs.

Manage business relationships proactively

Maintain robust contracts with your business partners, such as manufacturers, licensees, and distributors. These agreements should clearly define the scope of each party’s rights and obligations, including an acknowledgement that you are the owner of the IP rights and that your suppliers, distributors and anyone else must not apply to register your marks or anything similar as a trade mark, company, domain name, etc. Include clear language defining the scope of each distributor’s operation by territory as well as what happens to any excess stock at the end of the agreement.

This helps mitigate risks and ensures the smooth transfer of IP during a sale or investment.

Quantifying IP value

Recognise the value of your IP and be prepared to articulate it. Trade mark registrations, patents, designs and other protected assets can be leveraged as collateral for securing financing or as valuable bargaining chips during negotiations.

By proactively addressing these IP-related considerations, you can enhance the overall value of your food and drink business and position it for successful investment or exit opportunities in the future.

If you would like to discuss any of the issues raised in this article, then please find my contact details on my web profile or contact us at gje@gje.com.