Whilst there have been a number of unfortunate and high-profile retail casualties as a result of COVID-19, these casualties have created exciting opportunities for other retail and consumer brands looking to expand their brand portfolios. Post-acquisition, a buyer should adopt a brand strategy that complements both the purchaser and, if part of a share sale rather than just a business acquisition, the target. This could mean integrating the brands, allowing the buyer to venture into a new line of consumer products or services, or it could mean developing an independent path for the target in anticipation of a sale.
In this article we outline some of our top tips when it comes to acquiring a brand and its trade mark portfolio.
Intellectual property is often, if not always, one of the most valuable assets when it comes to acquiring a retail and consumer business out of administration. Sadly, rolling lockdowns have forced many retailers to shut their outlets, leading to severely disrupted cashflows. However, the positive news is that consumer confidence in a powerful brand can retain enduring value. In particular, trade marks act as a “badge of origin” to distinguish one business from another. Unsurprisingly then, our first tips relate to the importance of an effective due diligence process when assessing a target’s portfolio.
Due diligence of a trade mark portfolio raises a large number of important considerations. We list some headline points below, however we can offer legal support for businesses seeking to assess the value of a trade mark portfolio.
Whilst effective due diligence can facilitate a successful brand acquisition, a buyer should keep long-term post-acquisition strategy in mind. We recommend analysing the trade marks in detail to determine the true value of these assets. Onboarding a number of trade marks can sound promising, but it can be a long and expensive process to update the local trade mark registers for the whole portfolio, especially if certain registrations are in jurisdictions which you do not plan to operate in.
In addition, the value of a portfolio diminishes if those marks are vulnerable to cancellation and have not been used in the relevant jurisdiction. This can also be problematic where a retailer has an established product supply chain or distribution network in a particular jurisdiction, but it has no registered trade mark protection there. The good news however, is that following a brand audit, gaps in protection can be remedied with new applications for missing goods and services in the relevant territories. Brand audits can also save a business money through a focus on getting protection for the core goods and services.
Finally, and one of the most exciting attributes of retail and consumer brands are their adaptability. For example, a traditional fashion label could expand into new channels, such as homeware, furniture or cosmetics. However, it is not always the case that a target brand will have trade mark protection in these areas. Always consider – does this portfolio cover the goods and services of interest? If not, gaps in protection can be remedied with a filing strategy.
We always recommend running clearance searches prior to commencing substantive work on developing new products, ordering packaging and offering the brand’s products for sale to third party retailers or consumers. These searches will help clarify the risk of infringement and potential obstacles to registration.
Increasing the size of your existing portfolio (whether or not it is already comprised of many marks) will create additional demands on time and resource. Portfolios managed by multiple agents in various jurisdictions can exacerbate this problem, creating additional administrative issues which can be avoided by centralising your portfolio with one agent. Some overseas support will inevitably be required but the more you can streamline the management of your portfolio, the better.