Intellectual Property (IP)
Set of intangible assets protected by law — patents, trademarks, copyrights, trade secrets — that can significantly increase a business's value at sale.
Definition
Intellectual property (IP) refers to creations of the mind protected by law: patents, trademarks, copyrights, industrial designs, trade secrets, and proprietary processes. In a business sale context, IP is part of the intangible assets that can represent a significant portion of total value.
In French-language Quebec documentation, you’ll see propriété intellectuelle (PI) used for the same concept.
In Canada, patents and trademarks are registered with the Canadian Intellectual Property Office (CIPO). Copyright exists automatically upon creation of the work, but registration strengthens legal protection.
Why intellectual property matters in a business sale
For a buyer, IP represents a durable competitive advantage — it protects what sets your business apart in the market. A recognized brand, a patented manufacturing process, or proprietary software can justify a sale price well above the value of tangible assets alone. In Quebec’s technology and manufacturing sectors, IP is often the most valuable asset in the transaction.
A common trap: IP is held personally by the owner rather than by the company. If your patents, trademarks, or software are registered in your personal name, they don’t automatically form part of the sale. This issue needs to be fixed before going to market, and it can take several months depending on the complexity.
During due diligence, the buyer will examine the state of your IP in detail: are the registrations valid and up to date? Are there any active disputes? Have employees signed IP assignment agreements? A well-documented file reassures the buyer and protects the seller against post-closing claims.
What every seller should know
- Make sure all IP is owned by the company (not by you personally) — transfer it if necessary before launching the sale process.
- Build a full inventory: patents, trademarks, domain names, software, recipes, processes, customer databases.
- Confirm that your CIPO registrations are current and that renewals haven’t lapsed.
- Have key employees sign confidentiality and IP assignment agreements — the buyer will check for them.