Ip And m&A
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There are plenty of cautionary tales about what a business if you can’t call the product by the If anything is true when it comes to the value
can go wrong when intellectual property is name that it’s always been known by—even if it’s of IP in the context of M&A, however, it is that
not brought into M&A discussions. Probably an excellent product—because that’s what the there are no hard and fast rules in terms of the
the most high profile is what happened when consumer expects,” says Sahira Khwaja, an IP way things work out.
Volkswagen (VW) bought Rolls-Royce Motors lawyer at Lovells. “It’s a very expensive mistake
in 1998. to make. If the due diligence in that transaction
The rebranding of Norwich Union to Aviva
had said, ‘you won’t have the right to use that
dispels the notion that brand is a company’s
VW spent £430 million acquiring Rolls-
mark after completion so you’re going to have
all-important asset. Aviva is now ranked as the
Royce and the deal seemed to comprise all the
to go away and separately negotiate for the right
fourth most valuable insurance brand in the
necessary elements for manufacturing Rolls-
to use it’, then you would have expected VW
world. While brand value is often attached to a
Royce cars—it included the plant, the designs
to negotiate for that right before completion, company name, successful rebranding exercises
and the machinery. What it didn’t include—
whilst it had some bargaining power.” suggest brand is equally about the intangible
which did not become apparent until after the
assets that go along with a brand, such as the
deal had gone through—was the right to use the
ability to deliver on time or to make something
famous Rolls-Royce brand.
in a particular way.
Rival BMW acquired the rights to the Rolls
“ OFten, tHe mOSt
While the financial crisis has seen a slowdown
brand and its visual icons for just £40 million.
in the number of M&A transactions, activity
VW might have acquired everything else
VALUAbLe ASSetS
is picking up once again and an increasing
necessary to build and sell Rolls-Royce cars, but
cOntAIned WItHIn A
number of deals are being based on acquiring
without the right to use the famous name and
key pieces of intellectual property. The success
logo, it was left with very few options. Luckily
cOmpAnY Are nOt
of such transactions rests heavily on companies
for the firm, it was able to transfer much of the
dIrectLY recOrded.
knowing exactly what they are buying and how
Rolls brand equity onto the equally prestigious
tHIS IS cOmmOn WItH
much it is worth. Intangible assets are not always
Bentley name, which it had also acquired. But
easy to identify or value, and the due diligence
the initial damage had been done. trAdemArKS.”
process can be an arduous affair, but as the
“The Rolls-Royce example is a good one. You
VW and Rolls-Royce story shows, there are no
have to ask yourself what’s the point in buying short cuts.
8 World Intellectual property review September/October 2009
www.worldipreview.com
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