Corporate value increasingly resides in intangible assets. Trademarks, which concentrate brand identity, market recognition and consumer trust, are often among the most poorly documented assets in a transaction. Fragmented portfolios, outdated ownership records, incomplete chains of title, undisclosed disputes: the pitfalls are numerous and can, at best, weigh on valuation, and at worst, block the deal or trigger costly post-closing litigation.

Dreyfus & Associates regularly advises on IP due diligence in M&A transactions, fundraising rounds, and carve-outs. This article sets out the key risk areas and best practices to ensure trademarks become a transaction enabler rather than an obstacle.

1. Trademarks as high-stakes assets in M&A

More than a logo: what a trademark actually represents in a deal

A trademark is not a graphic element. It is the legal foundation that makes brand value transferable, enforceable against third parties, and defensible in court. In a transaction, trademarks perform three simultaneous functions: they secure market access (the registered owner can enforce its rights), they underpin financial valuation (royalty and excess profits methods apply to registered rights), and they condition operational continuity after closing, particularly for access to e-commerce platforms.

A well-structured trademark portfolio can transform a standard investment into a high-value strategic asset. Conversely, the absence of protection or undisclosed conflicts can trigger a significant price reduction or cause the transaction to collapse entirely.

Further reading: Should an Investment Fund Hold Trademark Rights?.

Portfolios carry history, and all its imperfections

Even well-known brands accumulate administrative inconsistencies over time. Years of renewals, entity restructures, and local agent practices create divergence between what internal teams believe they own and what official registers actually show. The most common issues are:

  • registrations in the name of dissolved or absorbed entities, without formal assignment
  • outdated addresses or company names on national registers
  • marks appearing active on internal schedules that have in fact lapsed
  • filings made by previous teams no longer aligned with the current structure
  • incomplete chains of title, leaving the enforceability of certain rights uncertain with respect to third parties

These anomalies slow due diligence, complicate recordal execution, and can block access to online marketplaces, which require up-to-date certificates matching the current legal owner.

2. Trademark due diligence: what to actually check

Verify the official register, not just the seller’s schedule

Standard practice is to rely on trademark schedules provided by the seller. This is not enough. Rigorous IP due diligence requires direct verification against official registers (INPI, EUIPO, WIPO, USPTO, and national offices in priority markets) to cross-reference data and identify discrepancies.

Ten areas to verify systematically:

  • Portfolio completeness, covering word marks, device marks, transliterations and product- or market-specific filings. See: Trademark Prior Art Searches
  • Ownership, confirming the correct legal entity is on record in every jurisdiction and identifying any legacy or dissolved entities. See: IP Rights on Business Closure
  • Registration status, confirming each registration is active and not subject to cancellation proceedings for non-use, which may be initiated after five years of lack of genuine use following the date of registration.
  • Renewal deadlines, checking expiry dates, payment status and any imminent deadlines
  • Oppositions and disputes, mapping open oppositions, cancellation actions and pending litigation
  • Key market coverage, coverage in current priority markets and those targeted for future expansion
  • Coexistence and licensing agreements, reviewing restrictions, territorial limits and obligations that may constrain post-closing strategy
  • Digital asset alignment, ensuring domain names, marketplace accounts and social handles match the legal trademark owner. See: Domain Name Portfolio Audit
  • Specification and Nice classes, verifying goods and services descriptions are aligned with actual and planned business activities
  • Similarity and dilution risks, identifying crowded spaces, third-party marks and risks for future enforcement

Further reading: How to Conduct IP Due Diligence | IP Asset Valuation and Strategy.

Align diligence with the business plan, not just the asset inventory

The central question is not “which trademarks exist?” but “do these trademarks allow the business plan to be executed?”. A target market without coverage, a product extension blocked by a coexistence agreement, or a mark exposed to cancellation risk: each of these factors can materially affect strategy and valuation.

The analysis must incorporate: planned expansion markets, post-closing product categories, potential rebranding plans, and platform distribution constraints.

3. Timeline management: two clocks that never synchronise themselves

Legal closing ≠ commercial operability

Legal teams optimise for signing and closing. Commercial teams optimise for launch. Trademark work sits between the two, and the gap is rarely managed proactively.

A portfolio may transfer legally yet be operationally unusable if ownership is not updated on registers, coexistence constraints are not mapped, or key markets lack enforceable rights. It is common for M&A teams to request a “quick trademark check” late in the process. Work that normally requires weeks of careful analysis is then compressed into hours, dramatically heightening the risk that material issues go undetected.

Recordals: sequence for speed

Once the transaction closes, ownership recordals must be filed across all relevant jurisdictions. Some require notarisation or apostille; others impose sequential multi-step chains where several historic entities are involved. Each step must be prioritised based on commercial urgency.

Best practices:

  • identify priority jurisdictions early based on the commercial launch schedule
  • combine recordal steps (assignment + address change in a single filing) to reduce cost and delay
  • budget for multi-step chains in portfolios spread across historic entities
  • flag dependencies to cross-functional teams before timelines are fixed

4. Post-closing governance: turning a fragmented portfolio into an operational asset

An M&A transaction is also an opportunity to reset IP governance. Trademarks are cross-functional assets: they concern legal, marketing, R&D, e-commerce, and finance. Without clear ownership and rules, fragmentation quickly returns.

Key governance steps after closing:

  • establish a clear IP policy defining filing, use, and approval rules for trademarks across the combined entity
  • centralise portfolio management in a single system with renewal alerts and dispute tracking
  • train commercial, marketing, and e-commerce teams on proper trademark use and infringement risks
  • implement continuous monitoring to detect infringements against the post-acquisition brand
  • align digital assets (domain names, marketplace accounts, social handles) to the new legal owner without delay

On the financial valuation of intangible assets in a transaction context: The Role of AI in IP Asset Valuation Strategy.

Conclusion: Put trademarks on the critical path

In every M&A transaction, trademark rights deserve to sit on the critical path, not to be treated as a trailing administrative task. The risks are real: delays, unplanned costs, blocked markets, post-closing disputes. So are the opportunities: a well-audited and properly structured portfolio strengthens valuation, secures the closing, and accelerates operational launch.

Dreyfus & Associates advises legal departments, investment funds, and M&A teams on comprehensive IP due diligence, assignment structuring, recordal management, and post-closing IP governance. With a network of over 500 partner firms across 50+ countries, we provide international coverage commensurate with the scale of your transaction.

Q&A

Why are trademarks so often overlooked in due diligence?

Because they are perceived as secondary assets compared to financial or operational ones. In reality, a poorly documented mark (incomplete chain of title, lapsed registration, undisclosed dispute) can block a closing, generate significant additional cost, or restrict post-acquisition commercial freedom.

What is a chain of title in trademark law?

A chain of title traces all successive transfers of a trademark from its original filing to the current owner. Each assignment must have been formally documented and recorded on official registers to be enforceable against third parties. An incomplete chain can invalidate enforcement actions in a number of jurisdictions.

Can a trademark be transferred separately from the business?

Yes. Under French and European law, a trademark can be assigned independently of the business to which it is attached. This flexibility is particularly valuable in carve-out or partial business disposals. The assignment must be formalised in writing and registered with the relevant offices (INPI, EUIPO) to be enforceable against third parties.

How long do recordals take?

Timelines vary considerably by country: a few weeks in well-equipped jurisdictions (US, EU), several months in more complex jurisdictions (parts of Asia or Latin America). Some require notarisation or apostille, extending the process further. This is why recordals must be anticipated before closing, not queued as a post-closing task.

What is a trademark vulnerable to cancellation for non-use?

Under French and EU law (Article L. 714-5 of the CPI; Article 58 of the EUTMR), a trademark may be cancelled if it has not been put to genuine use for an uninterrupted period of five years. In an M&A context, an acquirer may discover that certain portfolio marks are exposed to this risk, materially affecting the scope of the rights being transferred. See: IP Expert and Strategic Asset Security.