Selling a business is challenging. From vetting potential buyers to preparing financial statements to keeping negotiations on track — all while running your company — there’s a lot that can go wrong. In fact, almost no detail is too big or too small to affect the eventual outcome of merger and acquisition (M&A) deals. However, you can reduce the odds of a mistake by knowing where similar transactions have gone astray.

“It’s important to talk to owners who have successfully completed sale transactions and to work with experienced M&A advisers,” says Brian Reed, partner in Transaction Advisory Services at Weaver.

Smart Business spoke with Reed about common M&A mistakes and key items to resolve before closing a deal.

How might sellers hurt their chances before putting their business on the market?

You risk a letdown when you make overly optimistic future earnings projections or put too much weight on variable measurements, such as the sale prices of similar companies in stronger M&A markets. If you won’t budge from an unrealistic sale price, you could drive away an appealing buyer.

Work with a professional adviser to assess your company’s value as well as estimate an offering price the market can support. The two may not match because the price depends on contemporary economic, M&A market and sector conditions.

Where does timing factor into this?

Other critical seller mistakes revolve around timing, whether internal or external. For example, selling at the wrong time, at the end of a market cycle, could mean fewer buyers and possibly lower offers. If your sector has experienced a recent wave of M&A deals, the buyer base could be depleted, and you may want to hold off.

Sometimes sales are spurred by internal circumstances, such as the retirement of a founding owner, but these situations shouldn’t rush the sale. If your company is not ready for the market, consider appointing an interim head to make preparations and screen potential buyers.

Sellers, particularly those selling for the first time, often greatly underestimate the amount of work and hours it takes to prepare for sale. Have you allocated enough time to implement strategies to maximize your sale’s value? Is your company ready to promptly and accurately respond to hundreds of specific buyer requests? If you haven’t assembled a team with the time and resources to handle these requests, it could bring your potential deal to a standstill and deter otherwise interested buyers.

How might housekeeping impact deals?

Housekeeping issues aren’t trivial. They include essential tasks such as ensuring that contracts and legal obligations are in order. Some items that can trip companies up are:

• Poor accounting. If your financial statements and records are not properly organized and presented, it reflects poorly on your management, and the due diligence process will likely take longer. Sloppy accounting errors could mean tax or legal issues after the deal closes.

• Neglecting key players. Buyers want to know that key employees will stay onboard once the sale is completed. Make sure your top performers are offered financial and other incentives to stay.

• Locking in contracts. Don’t renew an expensive vendor contract as you’re about to transfer ownership. Buyers don’t like long-term contracts they didn’t negotiate, particularly if they’ll be penalized for breaking them. Negotiate short-term contracts or push for favorable terms.

What are some common loose ends to watch for and resolve?

Leaving loose ends hanging won’t endear you to your buyer, as they could hinder integration and future profitability. Some common unresolved internal issues involve:

• Minority interests. Buying out minority investors or shareholders before a sale means the buyer won’t need to deal with their demands later.

• Employee controversies. An integration team doesn’t want to deal with open legal issues, for example, while trying to build a new culture.

• Copyright confusion. Make sure all patents, copyrights, trademarks and other intellectual property holdings are in order. If you’ve failed to verify and document ownership, you may risk the deal’s value.

Brian Reed is a partner in Transaction Advisory Services at Weaver. Reach him at (972) 448-6936 or

Blog: To stay current on audit, tax and advisory issues that may impact your business, visit Weaver’s blog.

Insights Accounting is brought to you by Weaver

Published in Dallas

Securing trademark protection provides a company with legal rights to market and sell its services or products, and offers this same company an opportunity to stop other companies from marketing or selling services or products that are, or could be, infringing upon its protected marks.

However, each country has different criteria guiding the trademark process, which introduces varied time and cost elements that can be difficult to navigate. Ignoring these laws could mean forever losing legal protection and the opportunity to market and sell goods or services under a valued brand name in key markets.

“There is no such thing as an international trademark, but U.S. copyrights can be enforced internationally,” says Tom Speiss, a shareholder at Stradling Yocca Carlson & Rauth, who works as a business adviser and brand manager.

Smart Business spoke with Speiss about managing domestic and global brand portfolios for companies operating at home and abroad.

How can companies protect their brands domestically?

Companies can protect their brands domestically through both trademark and copyright law. For trademark, the U.S. is a common-law country, which means trademark rights begin to be established as soon as a company starts using a mark in commerce. But it’s important to conduct a trademark availability search and, if the mark doesn’t infringe upon another’s mark and appears to be available as a federal trademark, then file an application with the U.S. Patent and Trademark Office to acquire federal trademark protection.

In addition, companies also can file for federal copyright protection through the Copyright Office. To start this process, product packaging, website material or other advertising material can be used as part of a copyright application. Once a copyright registration issues, the registration potentially can protect a company’s product packaging, Web content and advertising content, as well as the design elements of a trademark. The U.S. copyright registrations then may be enforced internationally, through a treaty known as the Berne Convention Treaty.

If a company has plans to expand in foreign markets, when should management consult an intellectual property (IP) attorney?

A company should bring in an IP attorney as soon as it starts thinking about foreign market expansion, even if the plan’s realization is years away. Companies must be advised concerning all trademark rules for the countries in consideration, including possible infringement issues; whether the brand name is even available; the timelines and costs for applications; how use and non-use might affect the rights being granted; and when a company is required to exercise any rights it has been granted before a mark is vulnerable to cancelation. Each of these steps can be measured in years and have a lot of moving pieces, so — as ideas are generated — counsel needs to be involved.

What are the criteria for foreign market selection?

Companies can point to home successes with their products, including sales and brand equity, as they venture out. However, the mark used in their home country may be unavailable in a foreign market, which means the company won’t be able to transfer that equity even though it’s a proven brand.

The recourse is to develop a new name. But that brings risk because then its history at home won’t translate to the new market. This is another reason to bring in an IP attorney at the onset of brand expansion to assist in successful brand development or expansion.

What should you ask your attorney regarding brand management in other countries?

The most important first step is determining whether the target country’s trademark laws are governed by the principle of first-to-use or first-to-file. IP attorneys also can help companies establish timelines, such as when a company needs to start using or selling a product in the target country. Good counsel will thoroughly search to discover if the mark to be used in the foreign market is already in use for the same or similar goods or services. Along the way, counsel can help clients understand what other regulations might be advantageous or impede selling in foreign markets.

Tom Speiss is a shareholder at Stradling Yocca Carlson & Rauth. Reach him at (424) 214-7042 or

Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth


Published in National

Trademarks (™ or ®), trade names (Band-Aid or Kleenex), service marks (SM) and the like can be valuable brand assets of an organization or its CEO for that matter. They are not unlike patents that protect an inventor from someone duplicating an innovative process or product. The difference is that although you have to file post registration documentation at specified periods of time, trademarks do not have a limited right of use.

And like patents, the ownership of a trademark, trade name or service mark, as long as it is registered, can be assigned to anyone or anything: the person who created it, the shareholders or the company who markets the products and/or services.

So what defines a trademark?

By definition, trademarks, trade names or service marks are interchangeable terms and provide market differentiation, define proprietary processes, brand products and define ownership. The definition found at the U.S. Patent and Trademark Office,, states: “A trademark is a work, phrase, symbol or design, or a combination thereof that identifies and distinguishes the source of the goods of one party from those of another.”

An attorney who specializes in trademark law can best guide you on securing a trademark or you can go to the aforementioned website and manage the registration process yourself. The good news is it as long as there are not any complications, the process generally takes two years or less.

My focus on the importance of writing on this subject really promotes the marketing side of why using trademarks can provide a strong competitive advantage, lead to market differentiation and become an extremely valuable asset. The power of a name, phrase or company mark can be a game changer for some companies.

Using trademarks as a smart marketing strategy

Not unlike the days of sticking a flag in the ground to lay claim to a tract of land, using trademarks, trade names and/or service marks lays claim to company names, product and service names, positioning taglines, characters and artwork and more.

A good example of this would be McDonald’s. Try using a “Mc” in front of anything and see what happens. As consumers, when we hear something with the prefix “Mc,” we automatically connect with McDonald’s because of the way the company has branded its products.

What would happen if McDonald’s had not claimed that as is distinguishable mark? An example of a phrase, “It’s The Real Thing” was claimed by Coke, whose product, wave symbol and company name, Coca-Cola, are all registered trademarks. Laying claim protects the advertising investment these companies are putting into building name recognition and product differentiation.

What’s involved in making a claim?

So how does this apply to your company? You can benefit in very much in the same way.  Take an inventory of your marketing assets. What is trademarked? What should be trademarked? Do you have product and service names for what you offer the marketplace? If you do, how could that change your market position and brand preference? Do you have a logo mark? What about brand-defining graphics? All you need to do to make a claim is add a “™” or “SM.”

If you decide to complete the paperwork, pay the fee and register the trademark with the USPTO. Once approved, you can (and should) use the ® or registered symbol. Not using the symbols associated with evidence of claim of your trademarks can put them at risk.

Trademarks have hard asset value

I find that this point is best expressed by John Stuart, former CEO of Quaker Oats: “If this business were split up, I would give you the land and the bricks and mortar, and I would take the brands and trademarks, and I would fare better than you.”

Trademarks are marketing assets, and those assets can be owned by either you or by your company.

A smart transition strategy for business owners shared in a Vistage meeting by presenter Patrick Ungashick, author of “Dance in the End Zone,” suggested taking your company name and intellectual property and assigning them to a separate LLC. And since ownership of registered marks is transferable, that’s one smart business idea.

Kelly Borth is CEO and chief strategy officer for Greencrest, a 21-year-old brand development, strategic marketing and digital media firm that turns market players into market leaders. Borth has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 25 certified brand strategists in the United States. Reach her at (614) 885-7921 or, or for more information, visit

Published in Columbus

Companies everywhere are going over their budgets with a fine-toothed comb. So where does intellectual property fit in?

Your IP assets are one of the most valuable parts of your business and you should treat them as such, says Steven M. Haas, a partner with Fay Sharpe LLP.

“The overriding factor to keep in mind is that your intellectual property budget should not be considered overhead,” Haas says. “It should be considered part of your overall strategic plan, generating assets for the company.”

Smart Business spoke with Haas about how companies should evaluate the budget for their intellectual property.

What should companies keep in mind when developing an IP budget?

Your IP assets can slow down your competitors and increase their cost and uncertainty, and hopefully provide you with a proprietary market position. Another thing to consider is that banks and financial institutions love to see IP assets for financing, and for mergers and acquisitions. Patents, trademarks and copyrights are all critical assets. Also, by being proactive with your IP you can prevent problems down the road.

Your IP assets can be not only a sword but a shield for you, relative to your competitors.

How should companies determine how much should be allotted to their IP budget?

As your company develops new products and as you work with an outside counsel, it’s important to develop a plan to protect those innovations within whatever budget you can afford. Your outside counsel can certainly help you prioritize. There is no rule of thumb for how much you should be spending on your IP, like a certain percentage of total sales or something similar.

Businesses should keep in mind that these costs are often cyclical. For small and medium-size companies, it’s common for IP costs to ramp up when new products come out. But over time, things even out. There will be a cycle with fewer fees. The costs follow your product innovation cycle.

There are trends in industries where technological advances and customer-driven improvements contribute to a cycle with more fees. The budget for patents in particular is very cyclical for small and medium-size businesses.

What are some tips for controlling your IP budget?

There are several strategies companies can use. First, it's important to have a patent committee or person at your company responsible for interfacing with outside counsel to make sure that you are protecting what you need to protect and not wasting money on things that are no longer important. Depending on the size of the company, most companies have a person or committee that will interface between inventors, engineers and the business units on one hand and outside counsel on the other. That way you have a single point of contact with the firm, preventing mistakes, duplication of effort, and funds being spent where they shouldn't be.

With high turnover at today's companies, it's not uncommon for the patent lawyer/outside counsel to have been there longer than many others at the company, as a constant presence over many years and stages of the company. Rely on that experience.

Another tip: maintaining old patents is very costly. Once you receive a patent you have to pay maintenance fees four, eight, and 12 years after the patent is granted. The fees increase each time, so if a patent is no longer relevant to your product mix, you should cull your portfolio and make sure you are not spending your budget on these items.

Small companies — defined as companies with fewer than 500 employees — can receive a small entity discount from the U.S. Patent and Trademark Office.

What should companies do about international patents?

Foreign patent costs are very expensive. You have to be rigorous in terms of deciding to pursue patents and other intellectual property in other countries. The decision has to be justified by your sales or distribution in that country. You also must have a realistic ability to enforce the patent in that country, because the maintenance costs are so huge.

Most foreign patents require yearly fees, known as annuities, to keep them in effect. Many companies spend too much on foreign protection and ignore new projects, a decision that rarely makes the most business sense.

What are some other tips for patent budgeting?

Try to eliminate layers. Work with the lawyer at your outside counsel who is directly responsible for your matters. If you eliminate layers, you eliminate cost.

For some companies, using the provisional patent application can reduce costs. It is a less formal patent application, with a lower expense, but it can preserve patent rights — temporarily at least.

It's important to be proactive and avoid litigation, which can be extremely expensive from a direct cost aspect and because of the time involved. Work with patent counsel to avoid IP conflicts with your competitors. It can save you tons of money and headaches down the road. The earlier we see these issues, the more we can do to help you design around someone else's patent, invalidate the patent or come up with an alternative way forward.

All companies are very focused on budget right now. Outside firms are very willing to work within a set budget and to provide and build target billing estimates or fixed fees. We are very flexible about working with company's budgets, because that is what companies demand now. So don't be afraid to discuss budget issues with your outside counsel. There is always a plan that works for both the client and the lawyers.

Steven M. Haas is a partner with Fay Sharpe LLP. Reach him at (216) 363-9149 or

Published in Cleveland

With an estimated 80 percent of the value of S&P companies in their intellectual property holdings, businesses cannot ignore the impact of IP on their bottom lines, their equity value and their day-to-day operations.

Intellectual property law is among the most complex and misunderstood fields of law and represents a veritable mine field for businesses, says David G. Henry, Sr., a member of the Intellectual Property Group at Dykema Gossett PLLC.

“Failing to recognize intellectual property issues as they arise, asking the wrong questions, or acting upon the many myths surrounding the proper handling of IP issues can lead to substantial losses and/or liability for a business, its shareholders and its officers,” he says.

Smart Business spoke with Henry about recognizing intellectual property issues when they present themselves and what to ask IP experts before acting in any material way.

What are patents and some of the myths regarding them?

Patents are legal monopolies that allow owners to prevent all others from making, selling, using or importing patented subject matter, which can include machines, chemical compositions, manufacturing processes and business methods.

There is a common perception that you can protect an invention by mailing yourself a letter describing your invention. However, that does little, if anything, to protect an invention, and relying only on that will destroy any patent rights for failing to file a real patent application. Applications must be filed within one year of the first public use of the invention, its sale or offer of sale, or a description of the invention in a printed publication, among other things.

Another fallacy is that you cannot patent something that is just a new combination of old parts. In fact, most new inventions are merely new combinations of old parts. Assuming that it is impossible to patent your invention, or that patents are easily circumvented and not worth the time and expense (another common misconception), you may miss the opportunity to secure your most valuable asset, perhaps costing you millions of dollars in value.

Finally, many people believe they can get around an existing patent simply by changing or adding something to the patented item. However, patent claims often cover much more than the item shown in a patent, and, if you infringe, it could cost you your business.

What are some misperceptions regarding copyrights?

There is often confusion about what a copyright covers. Copyrights protect the expression of ideas and information, not the underlying ideas or information. Items such as books, software, photos, paintings and recorded music may be protected, while mere information like recipes, mathematical theorems and phone listings may not.

There is a common misperception that if you change someone’s work enough, you can get around the copyright. However, copyright covers much more than just literal, verbatim copying, including the making of derivative works. And admitting that you changed someone’s work to get around the copyright may be an admission of infringement.

There is also the perception that if you pay for a copyrighted article that you own it, especially if you paid to have it made. However, ownership most often results from creating the work yourself or having your employee create it as part of his or her job (a true ‘work for hire’ under copyright law). Companies often make the mistake of thinking that because they paid an independent contractor that they own the end product, but they often do not, absent a contractual assignment of the copyright.

There is also the myth that you only have copyright protection if paperwork is filed with the government, but copyright exists the moment a protectable work is reduced to tangible form. You can be liable for infringing on a copyrighted work for which no filing has occurred.

However, before you can sue for infringement, you must register the work in a timely manner. Registering too long after publication and after an act of infringement can cost you the right to statutory damages and attorney fees.

How do trademarks work?

Trademark protection is for words and symbols that distinguish the goods or services of one vendor from those of all others. Trademark rules protect the public from confusion and makes commerce work. Properly selecting and protecting trademarks will help you protect your reputation and market power, and avoid considerable trouble and expense.

Businesses must know what they do and do not own as a trademark. If the Secretary of State’s office merely says a name is available as a corporate name, for example, that doesn’t necessarily means it’s OK to do business under that name. Too often, companies make the mistake of incorporating under a name that, if used as a brand, may infringe trademark rights of a third party. Some also believe that merely filing an assume name certificate (DBA) creates exclusive rights, but such is not the case.

Concerning infringement: Just changing a spelling or adding a word to an existing trademark often does not protect you. Trademark infringement typically exists if your trademark (however spelled or configured) creates merely the likelihood of confusion as to source, sponsorship, approval or affiliation. Trademark infringement is easier to commit than most think, can be very difficult to spot, is expensive to litigate and is potentially ruinous in terms of wasted reputation investment.

Intellectual property is often a company’s most valuable asset and is easily overlooked, lost or destroyed, or infringed upon. By understanding the value of IP and consulting with experts in the field, you can avoid the potential land mines that abound.

David G. Henry, Sr. is a member of the Intellectual Property Group at Dykema Gossett PLLC. Reach him at (214) 462-6439 or

Published in Dallas

You’re proud of your website. It's your face on the Internet, your online presence, and it may provide a robust suite of services for your customers. But if you aren't careful, cyber-looters may be able to snatch elements of your site for their own use, leaving you without legal recourse.

"Be vigilant about your website," says Sandra M. Koenig, a partner with Fay Sharpe LLP. "Generally there seems to be a thought process that because it's on the Internet it's fair game. It's really not."

Smart Business spoke with Koenig about how to protect your website from copyright and trademark infringement.

How do standard copyright and trademark laws affect websites?

The traditional copyright and trademark rules still apply in the electronic world. So copyright protects copyright owners' rights, and it gives them the right to decide who can copy it. So if you own the copyright for your website, somebody should not be copying your website, or elements of your website, or taking photographs from your website, because that is still an infringement. It's still stealing.

What are some website-related copyright infringement issues companies should be aware of?

Most often, we get calls from clients telling us that someone took a photograph, text or other image from their website and copied it to their own site. Also, sometimes a competitor might emulate the overall look and feel of a website a little too closely.

There are a lot of relevant  trademark issues  that end up in legal battles, as well.

Perhaps unique to the Internet are the use of  someone else's trademark in your website's source code, domain name hijacking, or registering a misspelled version of another's trademark  as a domain name to direct consumers to your site.

How can 'metatagging' be used for copyright infringement?

Sometimes a competitor will insert another person's trademark in their own website's source code. So when people are searching online for that trademark, the competitor's website will show up at the top of the search results.

The trademark is buried in the source code – it's not visible to viewers of the site.

How can a company prevent competitors from copying tangible elements or intangible aspects of its website?

Primarily, companies must be concerned with vigilance. There are mechanisms by which you can lock your website by disabling certain options. That way, people can’t copy and paste elements that you want to keep secure.

Another important step is registering your copyright for the website or  sections of the website that are of critical importance. For instance, if you have detailed photos of your product line, you could register those instead of the entire website. Registration is beneficial  if you needed to sue someone. To ensure you are able to legally retaliate in a copyright infringement matter, it is important to have your registration in place or in the works, if it's not done already.

Keep your copyright and trademark notices visible on each web page. This is particularly useful because hyperlinking can create trouble, too. If a link doesn’t go to a company's home page but goes deeper into the website, the site visitor may not see the copyright or trademark notice. Many companies only put the copyright notice on the first or last page. It's a good rule to put legal notices on every page just in case someone links to a 'middle' page.

What steps can you take if you believe a copyright infringement has taken place?

Depending on the situation, you might begin with a cease and desist letter from your lawyer to try to negotiate a resolution right away, without going through the court process. A C&D letter is more economical, but it is always an option to file suit for copyright infringement. Arbitration is also an option.

Does a letter get results right away?

Surprisingly it often does. It wakes people up. You can request damages or you can just request someone stop using the copyrighted element or infringing trademark.

Aside from sending a nasty letter or filing suit, if the alleged infringement is a domain name issue, there are Uniform Domain-Name Dispute-Resolution Policy (UDRP) proceedings where the two parties go to arbitration over the domain name.

How do you know if you truly own the elements of your website?

There are two parts to a website, the underlying code and the visual images -- what you see on your screen. If you are working with an outside web site developer, ownership rights should be negotiable. They will often want to own the 'building block' code, which allows them to re-use this code without needing to reinvent the wheel. They should however, assign any images and text they might create to you.  Also, any content you are asking them to incorporate into the site needs to be owned by you.  So if you like a particular picture you want to be sure you have title or the right to use the content.  In other words, do not go online and just download content or take content from a book.

One thing to keep in mind is if you create the site internally, the company owns it. Sometimes elements are created by those outside the company. You might hire a photographer or someone to make illustrations. It's important to clear up who owns the copyright for those elements ahead of time because it will become important if someone were to steal one of those elements.

Sandra M. Koenig is a partner with Fay Sharpe LLP. Reach her at (216) 363-9137 or

Published in Cleveland