The business purchaser needs to ascertain if intellectual property rights are needed for the continued operation of the business. Intellectual property rights that are important include trademarks, copyrights, service marks, and trade names.

All of these IP rights are assignable. For example, the ownership of a copyright may be transferred in whole or in part by any means of conveyance. In addition, any of the exclusive rights included in a copyright may be transferred and owned separately. The owner of a trademark, service mark, or trade name may assign the mark or name or may license or franchise another to use the mark or name. An intellectual property assignment vests title and all right in the mark or name in the assignee, in contrast to a license or franchise that transfers only limited rights of use of the mark or name without transferring title.

Some intellectual property rights will obviously be needed to continue business operations. But it’s always a great idea to determine the intellectual property issues and obstacles during the due diligence period rather than post-close.

A letter of intent is a pre-acquisition agreement that shapes the preliminary understandings of the parties. Although usually non-binding (for the most part), it serves as the bridge between initial negotiations and the purchase agreement. And that’s important because the letter of intent should facilitate the deal.

The letter of intent will set forth the proposed deal structure, price, payment terms, and other general terms–a transaction summary. But more importantly, the letter of intent spells out the preconditions to closing the deal, such as due diligence process issues, purchase agreement construction, and any nondisclosure requirements.

Most of the time, the letter of intent does not create a binding obligation for the parties to do the acquisition. But that doesn’t mean a non-binding letter of intent is a document without a purpose.