Private equity is skilled at identifying and creating value when new businesses are being acquired. But as portfolio companies remain under ownership longer than anticipated, these plans should be revisited. Intellectual property is one area where reassessment may uncover significant value.
A strategy that made little economic sense when a portfolio company was expected to be sold relatively quickly can look different when ownership extends for several additional years. Meanwhile, changes in technology and the marketplace may have increased the value of assets that previously received little attention.
Sponsors facing delayed exits or moving businesses into continuation vehicles should be asking: Has the value of the company's IP changed, and is there a way to capture that value during the remaining investment period?
Why Reassessing Intellectual Property Matters
IP diligence at acquisition typically focuses on risk: Does the target own its technology? Are there freedom-to-operate concerns? Are its trade secrets adequately protected?
Those questions remain essential, but they do not consider whether the company's IP has become more commercially valuable. Acquisitions may have added patents, software, or trade secrets that were never independently evaluated. Competitors may now be using previously overlooked technology, online retailers may be selling knockoffs, or new developments may have expanded the market for existing assets.
AI makes this reassessment particularly timely. While AI may reduce the competitive advantage of certain software functionality, it can simultaneously increase demand for proprietary datasets, specialized workflows, historical information, and technical know-how.
A business that has spent years accumulating consumer purchasing data may find that AI creates new demand for information that competitors cannot readily replicate. That data may support new licensing arrangements, partnerships, or products, even as AI lowers barriers to developing competing applications.
Five Questions for an IP Portfolio Review
1. What does the company actually own?
Mature businesses accumulate IP through internal development, acquisitions, joint ventures, licenses, and employee innovation. Particularly after multiple add-on acquisitions, valuable rights may remain associated with predecessor entities, discontinued products, or technologies outside the company's current focus.
The review must therefore extend beyond public IP records to an understanding of the company itself and the proprietary source code, datasets, technical documentation, and trade secrets it holds, as well as any licenses and contractual rights it has relating to such technology or data.
2. Has the commercial importance of any of those assets changed?
An asset that attracted little attention five years ago may now have significant commercial importance. A proprietary dataset may now be useful for AI training; technology developed for one application may have become important in another; or workflows or manufacturing processes may have renewed importance, given supply chain and localization concerns.
Sponsors should therefore ask not only what the company owns, but what market shifts have occurred around those assets.
3. Who else may be using the company's IP?
Once an asset appears commercially important, the next question is whether others are using it. For patents, that may require mapping claims against competing products or technical standards. For trademarks or trade dress, it may involve searching marketplaces or consumer feedback for counterfeits. For datasets, it may involve examining whether third parties have been using or commercializing the company's proprietary information.
Similarity alone does not establish an IP claim, but technical materials, regulatory submissions, product teardowns, and other public evidence can identify situations warranting closer review.
That review may reveal licensing or enforcement opportunities as well as potential partnerships or other strategic options.
4. Is there a realistic path to realizing value?
Not every valuable IP asset justifies the investment needed to monetize it. Sponsors should weigh potential revenue against the cost and risk of pursuing the opportunity, including reputational considerations, impact on customer relationships, and management distraction.
Timing is especially important. An initiative that may take three or four years to produce meaningful value can make sense during an extended hold, but not if only 12 months remain before an expected exit.
5. Can the IP position increase value even without direct monetization?
The review should not be judged solely by whether it produces licensing revenue or an enforcement opportunity.
It may reveal that important know-how needs stronger trade-secret protection, gaps exist in patent coverage, or the IP needs better documentation. Addressing these issues can strengthen the company's value proposition at exit.
The Practical Takeaway
Not every portfolio company will contain overlooked IP capable of generating meaningful returns, and not every valuable patent, dataset, or trade secret should be directly monetized.
But an extended ownership period can justify a fresh assessment of opportunities that were never part of the original investment case. For companies entering continuation vehicles, facing delayed exits, or otherwise remaining in the portfolio longer than expected, that review can help identify new revenue opportunities, strengthen protection around strategically important assets, and improve the company's position for an eventual exit.
Venable's IP team works with sponsors and portfolio companies to identify underutilized intellectual property, evaluate licensing and enforcement potential, and develop strategies to protect and realize the value of those assets.