22 September 2026
When business owners think about preparing a company for sale, the focus usually goes straight to the numbers.
Revenue. Profit. Customers. Contracts. Growth.
All important. However, there is another question a potential buyer is likely to ask:
What exactly gives this business its competitive advantage, and does the business actually own and control it?
That is where intellectual property comes in.
For many Australian and New Zealand SMEs, IP is not simply a patent or registered trade mark. It may include software, product designs, copyright, confidential know-how, customer-facing content, formulas, processes, databases, technology, plant varieties, domain names and the brand reputation built over many years.
So, when a buyer starts looking closely at a business, the difference between having valuable IP and being able to prove that the business owns, controls and can continue using that IP can be significant.
IP is not something you deal with just before the sale
There is a temptation to think about IP as a due diligence exercise.
Check the trade marks. Find the patent certificates. Put the contracts into a folder. Done.
Unfortunately, that misses the point.
A buyer is not simply buying registrations. They are buying the competitive position those rights help create.
New Zealand government guidance on selling a business expressly notes that IP can form a significant part of the value of a business to a buyer. Australian government guidance similarly recommends identifying exactly which IP assets are included when deciding what is being sold.
The practical question is therefore not:
“Do we have IP?”
It is:
“If someone bought this business tomorrow, how much of what makes it valuable would actually transfer with it?”
That can produce some uncomfortable answers.
Australian and New Zealand technology exits show the bigger picture
There are some large-scale local examples of this principle.
Christchurch-founded Seequent developed specialist geoscience modelling software used around the world. In 2021, US infrastructure software company Bentley Systems acquired Seequent in a transaction valued at approximately US$1.05 billion. Bentley highlighted Seequent's software, cloud services, specialist capabilities and international market position when announcing the deal.
In Australia, construction software company Aconex was acquired by Oracle in 2018 for approximately A$1.6 billion. Oracle described Aconex as a cloud-based platform connecting owners, builders and project teams, and its subsequent financial reporting recorded substantial identifiable intangible assets as part of the acquisition accounting.
These are much larger businesses than the typical SME, and their transaction values cannot simply be attributed to IP.
But the lesson scales down.
A buyer pays for a business because it has something worth acquiring: technology, customers, reputation, systems, products, market access, knowledge or some combination of them.
IP is often what helps stop those advantages walking out the door the day after settlement.
What will a buyer actually want to know?
Imagine you run an Australian engineering company that has developed specialised software internally.
Or a New Zealand food business with a recognised brand and proprietary manufacturing process.
Or an agtech company with years of testing data, plant material and technical know-how.
A buyer may start asking questions such as:
- Who owns the brand?
- Are the key trade marks actually registered in the markets that matter?
- Who wrote the software?
- Were external developers or designers used?
- Has their IP been properly assigned to the business?
- Who developed the product designs, packaging, website, photographs or marketing material?
- Are important processes documented, or do they exist only in the founder's head?
- What information is treated as confidential?
- What measures are actually used to keep trade secrets confidential?
- Are key technologies licensed from somebody else?
- Are there restrictions in those licences that could affect a sale?
- Could third-party IP rights prevent the buyer from continuing to sell an important product?
- Are patents, designs and trade marks registered in the right entity?
- Are registrations current?
- Does the business depend heavily on one employee or founder who may leave following the sale?
These are not administrative details. They go directly to risk and value.
One of the biggest traps for SMEs: assuming the company owns everything
This is particularly important where contractors, freelancers, consultants, developers or agencies have helped build the business.
Paying someone to create something does not necessarily mean you automatically own all the IP in it.
For example, IP Australia warns that IP created by an Australian contractor will generally belong to the contractor unless the contract provides otherwise. It specifically recommends written agreements dealing with ownership when contractors create assets such as websites, designs, drawings, databases and logos.
The precise ownership rules depend on the type of IP and jurisdiction, so businesses operating across Australia and New Zealand should not rely on assumptions.
If a buyer discovers during due diligence that a former developer still owns part of the software, or that the branding was never properly assigned by the design agency, what looked like a valuable asset can quickly become a transaction problem.
Trade secrets need more than a “confidential” label
The same applies to confidential know-how.
Plenty of businesses say they have trade secrets.
Far fewer could immediately produce a clear record identifying:
- what the confidential information actually is;
- where it is stored;
- who has access to it;
- what confidentiality obligations apply; and
- what practical steps have been taken to keep it confidential.
That distinction matters.
A secret recipe, manufacturing process, algorithm, pricing methodology or technical procedure may be enormously valuable.
But if it has been routinely circulated without confidentiality controls, stored in unrestricted folders or shared with contractors without appropriate agreements, a buyer may reasonably question how defensible that advantage really is.
Protecting your own IP is only half the job
There is another issue that is sometimes overlooked.
Owning IP does not necessarily mean you are free to use it.
A business may hold a patent over an improvement but still need rights to somebody else's underlying technology. A software company may depend on third-party components subject to licence conditions. A new product name may run into an earlier trade mark.
This is why freedom to operate can become important during investment or acquisition due diligence.
A buyer wants to know not just whether you can stop competitors copying you, but whether someone else could stop the business doing what it currently does.
Think like a buyer before there is a buyer
The best time to address these issues is not when a term sheet arrives.
It is while the business is still growing.
For most SMEs, that does not require an enormous IP portfolio. It means putting some basic disciplines in place:
- Identify the IP that actually matters.
Focus on the assets that create revenue, differentiation or barriers to competition. - Check ownership.
Make sure important IP is owned by the correct company and that assignments from founders, employees, contractors and collaborators are properly documented. - Protect what needs protecting.
Consider trade marks, patents, registered designs, plant breeder's rights, copyright, confidentiality and contractual protection as appropriate. - Document valuable know-how.
A buyer should not have to rely on one person's memory to understand how the business works. - Review licences and third-party rights.
Know what the business owns, what it licenses and whether those arrangements can continue after a change of ownership. - Keep the IP portfolio aligned with the business.
Products change. Brands change. Markets change. Your IP strategy should change with them.
The exit starts much earlier than the sale
You do not need to be planning to sell your business next year to think about exit readiness.
Good IP management also helps with investment, licensing, joint ventures, expansion and succession planning.
More importantly, it forces a business to answer a deceptively simple question:
What is it that makes us difficult to copy?
Once you know the answer, the next question is whether you have actually protected it.
For an SME owner who has spent years building a business, finding out during due diligence that some of its most valuable assets are poorly protected, owned by somebody else or impossible to transfer is a problem that could often have been avoided.
The strongest exit position is usually built well before anyone talks about an exit.
If you are building, buying or preparing to sell a business, IP Solved can help identify the IP that matters, address ownership and protection gaps, and make sure your IP position supports rather than complicates the transaction.
