The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/133445
28 VALUING INTELLECTUAL PROPERTY "HISTORICALLY, WHEN SOMEONE WAS LOOKING TO BUY A COMPANY THAT HAD SOME IP , THEY WOULDN'T REALLY VALUE IT SEPARATELY. THEY WOULD LOOK AT THE EBITDA, LOOK AT ITS PRODUCTS AND CUSTOMERRELATIONSHIPS, AND JUST KIND OF THROW THE IP INTO THE EQUATION LIKE THEY WOULD THROW IN A DRILL PRESS." ents, trade-marks or other IP were not fully reflected on the balance sheet, but were buried among other assets, and assumed to be part of the goodwill," he says. Jeff Barnes, a partner in the M&A Group at Borden Ladner Gervais LLP's Toronto office, says "historically, when someone was looking to buy a company that had some IP, they wouldn't really value it separately. They would look at the EBITDA, look at its products and customer-relationships, and just kind of throw the IP into the equation like they would throw in a drill press." Not only was the value of the IP generally not broken out separately in many M&A deals, the focus during due diligence was to ensure the IP was protected, says Barnes. "A buyer looked at the target's IP in the light of 'is anyone suing you?' and 'is there some record that you actually have the right to use this specific IP?'" But the thinking has changed, he says, "moving from a sort of negative due diligence that says 'tell me there's nothing in here that's going to bite me' to a positive due diligence that says 'let's really understand what's in here and how we can maximize its value.'" Elizabeth Harrison, QC, a senior partner in the Vancouver office of Farris, Vaughan, Wills and Murphy LLP, says "one of the challenges in valuing a target's IP portfolio is that technology evolves so very quickly, in some cases it can be challenging to value the IP." Oftentimes, in sophisticated transactions, there's significant in-house IP expertise at the buyer, says Harrison. When there's a short time frame involved, and there's not the sophisticated expertise in-house or additional expertise is required, sourcing external expertise can be exacting. "It can be difficult for someone to come in to analyze what you are concerned about when there's a short time frame, particularly when you are talking about very sophisticated IP," says Harrison. "You will find these specialists, but in my experience they are mostly in the US or Europe." But whether the expertise comes from in-house or external specialists, in analyzing the existing IP of the target to determine if there are any deficiencies, a key question is "if there are deficiencies are they resolvable?" says Harrison. So if IP has garnered a new place in the sun, can it be a deal breaker or a deal maker? Barnes says the examination of IP is being undertaken much earlier in the due diligence process. In reviewing a prospective target, "you can look at the IP as part of your early due d w cl p ac "t m H "Th in as C va va n re o sp te ro p th su LEXPERT® RANKED LAWYERS RANKED LAWYERS Paré, Robert Park, QC, J. Jay Pasquariello, Joe Fasken Martineau DuMoulin LLP (514) 397-7517 rpare@fasken.com Norton Rose Canada LLP (403) 267-8354 jay.park@nortonrose.com Goodmans LLP (416) 597-4216 jpasquariello@ goodmans.ca Mr. Paré has a national and international corporate/ commercial practice focusing on corporate law, M&A, governance matters and securities law. Recognized as one of Canada's most distinguished business lawyers by Lexpert® and Chambers Global. Mr. Park practises oil and gas law, representing producers, consumers, marketers, pipelines, distributors, governments, banks and investors. His experience embraces acquisitions, divestments, and production sharing and concession agreements. Mr. Pasquariello's practice focuses on corporate insolvencies, restructurings and bankruptcies. He represents debtors, court officers, debt holders, committees and other key parties in complex domestic, cross-border and international matters. ROB.indd 28 Pennycook, Carol D. Davies Ward Phillips & Vineberg LLP (416) 863-5546 cpennycook@dwpv.com Ms. Pennycook focuses on finance, banking, M&A, P3s and reorganizations. Represents borrowers, arrangers and lenders/ syndicates in project and infrastructure financings, debt offerings, structured financings and derivative transactions. Perry, QC, F. Brent Pillon, Elizabeth Pin Felesky Flynn LLP (403) 260-3306 bperry@felesky.com Stikeman Elliott LLP (416) 869-5623 epillon@stikeman.com Goo (41 spin Mr. Perry's broad business and personal tax planning practice focuses on financings, M&A, divestitures, corporate and trust structuring, and international tax planning. He is a prolific author and teacher for professional and industry groups. Ms. Pillon is a partner in Toronto's litigation group and co-head of the insolvency and restructuring group. She acts for debtors, monitors, receivers, trustees, creditors and purchasers before the Ontario, Québec, Alberta, BC, Manitoba and NS courts. Mr. Goo Sec an e M&A prac lead Can esta seni 13-04-23 1:08 PM