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M&A IP Due Diligence

Why is "Chain of Title" important in M&A?

Chain of Title proves the history of ownership. If there is a break in the chain (e.g., a developer didn't sign an IP assignment agreement years ago), the target company may not legally own its key software. This can lead to post-acquisition lawsuits. We verify every link in the chain to ensure clean title.

Can IP issues stop an M&A deal?

Yes, significant IP issues ("Deal Breakers") can halt a transaction. For example, if the target company's main brand is involved in a losing trademark dispute, or if their core patent has expired. Identifying these early allows the buyer to renegotiate the price or walk away.

How do you check for global IP protection?

We use international databases (WIPO, USPTO, EPO) and coordinate with local counsel in key jurisdictions to verify the status of trademarks and patents globally. This ensures that the company you are buying is protected not just in Georgia, but in all its export markets.

What happens to licenses when a company is sold?

It depends on the "Change of Control" clauses in the license agreements. Some contracts automatically terminate if the company is sold to a competitor or new owner. We review all material contracts to ensure key licenses will remain valid post-closing.

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M&A IP Due Diligence (Intellectual Property Audit during Mergers and Acquisitions) is one of the most complex and large-scale legal processes in corporate law. When one company acquires another or two businesses merge, intellectual property often represents the primary driving force behind the deal. This service focuses not only on verifying the existence of assets but also on the transferability of rights and post-transaction risks. An improperly conducted audit can lead to a situation where a buyer acquires a company but cannot use its brand or technology due to legal restrictions. In M&A transactions, the IP audit determines the final value of the deal and establishes the warranties that the seller must provide.

What Does M&A IP Due Diligence Service Cover?

This is deep legal research that goes beyond a standard audit and includes:

  • Transferability Analysis: Checking for clauses in licensing agreements (Change of Control clauses) that prohibit the transfer of rights upon a change in company ownership.
  • Full Portfolio Inventory: Verifying the status of global and local registrations (patents, TMs) in all jurisdictions where the target company operates.
  • Litigation History: Analyzing past, current, and potential disputes that could impact the company's valuation.
  • IP Security Policy Assessment: Evaluating whether the company has systems in place to prevent information leakage.
  • Deal Structuring: Advising on the best way to transfer IP assets (asset purchase vs. share purchase) from tax and legal perspectives.
  • Drafting Indemnity Clauses: Creating mechanisms for damage compensation if IP issues are revealed after the audit.

Real-World Scenarios Where You Need This Service

M&A IP audit is critical during major corporate transactions:

  • Acquiring a Competitor: A large company buys a smaller competitor for its technological patents. It is essential to confirm that the patents are solid and difficult to invalidate.
  • International Expansion: A Georgian company is being sold to a foreign holding. The buyer needs to know if the Georgian brand is protected internationally.
  • Asset Deal: A company buys not the entire business, but only its software. The code needs to be isolated and transferred with clean title.
  • Merger: Two companies combine. Their brand portfolios need to be optimized, and conflicting marks identified.

Georgian Legal Framework and Regulations

In the M&A context, IP audit relies on the Law of Georgia on Entrepreneurs (reorganization rules) and the Civil Code of Georgia. Special attention is paid to the Law of Georgia on Competition to ensure the merger does not lead to abuse of a dominant position through IP rights. During the transaction, Sakpatenti registries and international databases (WIPO) are checked. The Tax Code of Georgia is also relevant, as the transfer of intangible assets creates specific tax obligations.

Service Process Step-by-Step

This is an intensive process requiring teamwork:

  1. Preliminary Screening: General overview of the target company's IP profile via public sources.
  2. Full-Scale Audit: Examining thousands of documents placed in the Data Room.
  3. Management Sessions: Q&A sessions with the company's lawyers and technical team to clarify uncertainties.
  4. Drafting Transaction Documents: Reflecting audit results in the Share Purchase Agreement (SPA) as warranties and liabilities.
  5. Closing and Post-Closing Actions: Closing the deal and officially re-registering rights with Sakpatenti.

Why Choose Legal.ge?

M&A transactions require lawyers of the highest qualification. Legal.ge gives you access to corporate and IP law experts experienced in managing complex mergers and acquisitions. Specialists selected through our platform ensure that your multi-million deal is secure and that intellectual property transfer occurs without any legal flaws.

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