Ecovis in Australia

M&A data analytics: The use of data in mergers and acquisitions

25.05.2022

Collecting, analysing and correctly evaluating data is more important than ever for successful M&A. The M&A specialists from Taurus Corporate Finance, an ECOVIS partner in the Netherlands, explain how correct data analysis works and which methods should be used.

The market for mergers and acquisitions, especially the acquisitions of mid-sized companies, is hardly transparent. You rarely see asking prices and it is easier to break into Fort Knox than to learn the details of successful transactions. For obvious reasons, the privacy of the parties involved is more important than transparency.

The housing market is, in contrast, a different ballgame. When selling a house, any newbie can estimate the proceeds based on publicly available data, including square footage, construction dates, and location. For the sale of a company, this is far more difficult, mostly due to a lack of publicly accessible data. Of course, an M&A specialist can compare the transaction to his/her recent deals, but the variety in deals is far too vast to capture with any one M&A specialist’s data set.

Are you currently involved in an M&A transaction or planning one soon? Are you using data effectively? We would be happy to advise you.

Mark Eenink, Partner, Taurus Corporate Finance*, Deventer, Netherlands

Why data is becoming increasingly important in M&A transactions

• When valuing companies, we need to look at the value of other companies in the industry or adjacent industries for comparable values. We use the most commonly accepted data collection method, that of Professor Aswath Damodaran of the Stern School of Business at New York University. This includes specific data on the companies, industries, and countries analysed.
• We use external data sources to find prospective buyers and sellers. We use online tools such as Pitchbook, Mergermarkets and ARX to determine which companies are active in specific markets and uncover their M&A strategy.
• More and more companies are investing in a vendor due diligence process, which includes an assessment of working capital needs determined by audit files and debt. We use purpose-built software to analyse historical trends and the impact on future cash flow.
• Counterparties also rely on data to be able to respond effectively in the negotiating process. Various suppliers of virtual data rooms have developed great tools for this purpose.

Investing in data pays off

These tools are paramount in today’s M&A market. It is still possible to advise a company on a transaction or part of a transaction without them but investing in data is critical for a customised approach in which maximum gains are achieved. By way of comparison, completing a merger or acquisition without the benefit of data is like driving to an unfamiliar destination without GPS.

For further information please contact:

Mark Eenink, Partner, Taurus Corporate Finance*, Deventer, Netherlands

Email: m.eenink@taurus.nl

*ECOVIS cooperates with Taurus Corporate Finance, a Netherlands based Corporate Finance firm with office in Deventer

Protecting intellectual property in China: How to protect your know-how.

16.05.2022

Companies often invest a lot in the development of products or technical inventions. But there is a great danger that others will use these technologies for themselves and thus secure competitive advantages – at the expense of the inventors. What needs to be considered to effectively protect intellectual property in China? The Ecovis experts know what to do.

Companies are often sceptical when they think about intellectual property (IP) rights in China. But despite all the claims, there is a comprehensive legal basis in China to protect domestic and foreign IP. Moreover, there are continuous new developments to enforce and protect IP rights.

Making use of the various IP rights

Technical IP rights include patents, utility models and design protection. However, to enforce these IP rights in China, companies must first register them there. This is done by filing an application with the patent administration authority of the State Administration. It is important to note that the regulations in Hong Kong, Taiwan and Macau differ. The registrations of IP rights in China are not valid there. Therefore, companies must register their IP rights separately according to the respective local regulations.

Taking action against IP rights infringements

If a company is affected by an infringement of its registered IP rights, there are various ways it can take action:

• Judicial procedure
• Administrative procedure

The administrative procedure is the responsibility of the China National Intellectual Property Administration (CNIPA) and its local authorities. As a measure against IP rights infringements, businesses can also involve the Chinese customs authorities, as they are allowed to seize goods from counterfeiters.

In 2021, China updated its patent and copyright law and tightened the penalties for infringements. Patent infringements in China are subject to a compensation payment of up to CNY 5 million, i.e. around EUR 695,000. In addition, the government has introduced punitive damages. These go beyond the actual damages and are applicable upon proof of a deliberate offence.

Do you want to protect developments or products in China? We know what documents you need.

Richard Hoffmann, Rechtsanwalt, Ecovis Richard Hoffmann Rechtsanwaltskanzlei, Heidelberg, Germany

Protect trademarks in time

Trademark protection in China requires additional registration. Since China, like Germany, is a member of the World Intellectual Property Organization (WIPO), trademarks can be registered there through the Madrid System for International Trademark Registration (www.wipo.int/madrid/en). Nevertheless, it is advisable to register a trademark locally in China. This is because trademark protection in China does not begin with the use of the trademark, but only when it is registered, say the Ecovis experts.

Protection of trademark rights strengthened in China

Since 2019, there has been a new development that makes the malicious filing of a trademark punishable. This is the case when a person files a trademark that he or she knew or should have known would infringe the rights of a third party. This includes, for example, filing a previously unregistered foreign trademark. In January 2022, further guidelines came into force. These define criteria for identifying trademark infringements, such as registering a trademark without actually using it. In the event of legal problems with trademarks, there is also the alternative of initiating administrative proceedings. This lies within the responsibility of the China Trademark Office (CTMO).

Intellectual property rights

Unlike technical property rights or trademark protection, copyrights are effective in China even without prior registration. However, voluntary registration of a copyright in China is an inexpensive way to obtain additional protection. Registration is a good basis for evidence in the event of a lawsuit. There is also the alternative of administrative proceedings for copyright. The Chinese National Copyright Administration (NCAC) is responsible for this. The maximum amount of damages for copyright infringement is CNY 5 million. It is also possible to claim punitive damages.

How to protect intellectual property in China: Develop a strategy

It is sensible and advisable for companies to consider a strategy for IP protection when entering the Chinese market. The following are some tips for an IP protection strategy:

• Thoroughly document IP protection rights (evidence of registration, validity and ownership of the IP right).
• Integrate IP protection into employment contracts, for example through confidentiality obligations.
• Use the legal possibilities of IP protection in contracts with joint ventures, suppliers and trading partners.

Intellectual property protection: How to register your trademarks in China

Registration: A trademark must be registered with the CTMO. Foreign companies without a registered office in China are not allowed to register themselves. They must appoint a trademark agent, such as a local lawyer. All documents must be submitted in Chinese.

Registration fees: The official fees to register a trademark in one trademark class and for no more than ten products in China are usually only a few hundred US dollars. For each additional product in the class of goods, i.e. from the eleventh product onwards, additional fees are due. There are also costs for lawyers and translation fees.

Duration of trademark protection: The trademark is protected for ten years from the date of registration. Renewal is possible. In the case of international registrations extending to China, the term of protection can also be 20 years. If a six-month period has elapsed after the expiry of protection, during which companies can renew upon payment of increased fees, the trademark in question or a similar trademark is barred from re-registration for a full year.

For further information please contact:

Richard Hoffmann, Rechtsanwalt, Ecovis Richard Hoffmann Rechtsanwaltskanzlei, Heidelberg, Germany
Email: richard.hoffmann@ecovis.com

Immigration and permanent residency: US immigration service changes the rules

09.05.2022

The US immigration service US Citizenship & Immigration Services (USCIS) is adopting a risk-based approach that waives interviews for certain applicants who have filed Form I-751 (Petition to Remove Conditions on Residence).

Non-citizens who obtain permanent resident status based on a marriage that began less than two years earlier, receive their status on a conditional basis for two years. Filing Form I-751 enables these conditional permanent residents (CPRs) to remove the conditions on permanent resident status.

If you need assistance with filing an I-751 or would like to discuss an interview waiver, please feel free to contact us.

Maria Gandarez, Partner, Pryor Cashman LLP*, New York, USA

Effective immediately, this update replaces the previous agency guidance that required CPRs to undergo a mandatory interview if they obtained CPR status via consular processing. Under the new risk-based approach, USCIS may waive the interview requirement if the adjudicating officer determines the following:

• The applicant generally meets the eligibility requirements.
• There is sufficient evidence of a bona fide marriage.
• The joint-filing requirement is eligible for a waiver (if applicable).
• There is no indication of fraud or misrepresentation in supporting documents.
• There are no complex facts or issues to resolve.
• There is no criminal history that would render the CPR removable.

By adopting this new risk-based approach, USCIS hopes to increase efficiency and decrease processing times. This update comes as a result of the agency’s continuing efforts to better allocate staffing resources, eliminate burdens for applicants seeking benefits and address the concerns of the public and stakeholders.

For further information please contact:

Maria Gandarez, Partner, Pryor Cashman LLP*, New York, USA
Email: mgandarez@pryorcashman.com

*Ecovis cooperates with Pryor Cashman LLP, a US-based law firm with offices in New York and Los Angeles.