Buying a creative agency is an interesting one, as you need to clearly ask: What is it that you are actually buying? Is it the work created by the agency prior to you taking ownership? Is it the goodwill of the business? Or, maybe you are just purchasing shares in the business and becoming a part owner? This article will run through the broad legal considerations you need to make if you plan on buying a creative agency as a whole.
Brand Name
As the agency works with clients to provide creative work, this client relationship will be one that is specific to the vendor’s creative direction. The value of the business will lie on the vendor’s reputation in the industry and whether or not that has increased the worth of the vendor’s business or brand name. If you are buying a creative agency, it would be important to consider taking ownership of the business name so that you can continue operating with this recognition already secured.
Intellectual Property
Although the previous work of the creative agency is likely to not be included in the business sale, the brand identity may well be. For example, if the creative agency has a trade mark on the logo or business name, it would be important to get this assigned to you and ensure ownership has changed hands in the official records. For past creative work, make sure intellectual property ownership is discussed openly with the vendor. To avoid confusion or future disputes, get a Sale of Business Agreement drafted.
Employees and Talent Retention
As with all business purchases, you will need to consider whether or not you will be offering employees ongoing employment with the business. This may be a good idea for employees who have a close relationship with specific clients. This will assist in not only retaining talent, but also in ensuring the clients that the quality and creative work of the agency will be of the same high standard.
Restraint of Trade
If current employees are not given a job offer, is there a Restraint of Trade placed upon them once they have finished up in the business? Remember to check any existing Employment Agreements and consider whether or not employees will be able to work for your competitors while you start to operate the business. It is also quite common for restraints to be placed on the vendor of the business. If this is important to you and you believe that the vendor could continue working as a competitor, consider including a Restraint of Trade Clause in the Sale of Business Agreement.
Conclusion
Buying a creative agency can be a profitable venture if you ensure that you are able to build on the business name and reputation. A formal Sale of Business Agreement will outline what both parties have agreed upon, including what is being sold and its value. Our team of specialist contract lawyers can assist in reviewing any contractual agreements you may need as a result of the business purchase.