A team came to us with an expensive but "ownerless" asset: technology built up over years, a recognisable brand and a customer base that were worth more than the operating company's revenue. The problem was that, legally, all of it sat inside that same operating entity - mixed in with debt, contracts and tax exposure. The investor was ready to come in with cash, but not into that "common pot." Below is how we carved the intangible assets out into a separate vehicle (an SPV) and closed the deal so that both sides came out protected. This case is composite, with no real names or company names.
The situation: the asset exists, but there is no structure for it
The operating company (hereinafter - the OpCo) had been in the market for several years. Over that time it had accumulated genuinely valuable intangible assets (IA):
- a software product and the related work - source code, architecture, algorithms;
- a trademark and brand under which all sales were made;
- a customer base, methodology and internal procedures that gave the company an edge.
Formally, almost none of this was recorded as a separate asset on the balance sheet. Rights to the code belonged either to the company or to contractors and employees - under various agreements and with no continuous chain of title. The trademark was registered, but in the name of the founder as an individual. Customer contracts were signed by the OpCo, which also carried the loans, the lease and the tax history. In other words, the value was "smeared" across the operating company and its people.
Why this blocks a deal. An investor is not buying last year's revenue - they are buying the right to future cash flows from the asset. If the asset cannot be legally separated from a company that carries debt and risk, the investor either pays a discount "for uncertainty" or walks away from the negotiations entirely. In our case the valuation gap reached tens of percent.
Why "assets inside the operating company" is a risk for both sides
When the intangibles are not carved out into a separate entity, everyone involved is exposed.
- Investor's risk. By putting money into the OpCo, the investor inherits its past: tax claims, counterparty lawsuits, collateral pledged against loans. If the operating company goes bankrupt, the valuable IP can be swept into the bankruptcy estate.
- Founder's risk. Without a clear carve-out of the asset, it is easy to "give away too much": the investor gets a stake in the whole company rather than in the specific asset, and control over the technology is diluted.
- Risk to the asset itself. Rights to code registered to different people and contractors are a landmine. A single disgruntled developer can challenge the ownership of a key module.
The solution: carve the IA out into a separate SPV
An SPV (special purpose vehicle) is a purpose-built entity "for the asset": a clean company with no operating history, into which the rights to the intangibles are transferred. This is the company the investor joins. The idea is simple - separate the value from the risk and give the investor a transparent object to invest in.
We gathered all the IA into a single register and rebuilt the chain of title to the code: collected the missing acceptance acts and assignments of exclusive rights from contractors and employees, and transferred the trademark away from the individual.
We set up a new entity with no debt and no history. We locked in a shareholders' agreement: who participates, on what terms and with what veto rights.
We transferred the rights to the code, brand and base into the SPV for consideration, at market valuation - so the deal would not look like asset stripping and could not be challenged by the OpCo's creditors.
The SPV granted the operating company a licence to use the IP and brand. The business kept running, while ownership of the asset stayed inside a protected perimeter.
The investor put cash into the SPV's equity - into a clean asset, free of the OpCo's operating risks. In parallel, we locked in the mechanics that protect both sides.
The legal mechanism: exactly how we moved the assets
You can "move the IA into the SPV" in three fundamentally different ways, and the choice affects taxes, timing and how resilient the deal is to challenge. We compared the options and chose a transfer by assignment agreement.
| Mechanism | Essence | Drawbacks in our case |
|---|---|---|
| Reorganisation (spin-off) | A new entity is spun off from the OpCo with part of the assets | Slow; creditors are entitled to demand early performance of obligations; it drags part of the OpCo's history along with it |
| Contribution to share capital | The IA are contributed to the SPV as a non-cash contribution | Requires an independent valuation, a disputable basis for tax, and makes it harder to "split" the stakes with the investor |
| Assignment by agreement | The SPV buys the exclusive rights for consideration at a market price | Chosen: transparent, for consideration, minimally challengeable with a correct valuation |
The key detail - consideration at a market price. A gratuitous or undervalued transfer of assets from the OpCo to the SPV is a direct ground to challenge the deal as harmful to creditors (including in bankruptcy). That is why the transfer was based on an independent valuation, with real payment and a clear business purpose. This protects the structure from being unwound through the courts.
In parallel, we "cleaned up" the rights: documented assignments of exclusive rights to the code from every developer and contractor involved, transferred the trademark to the SPV, and put the methodology and base under a trade-secret regime. Without this housekeeping, even the most elegant structure stays vulnerable.
Protecting the parties: what we wrote into the deal
The structure is only half the job. The other half is the terms that balance the interests of the investor and the founder, so that neither becomes hostage to the other.
What protects the investor
- Representations and warranties. The founder warranted that the title to the IA was clean: that the rights belong to the SPV, are not pledged, not disputed, and do not infringe third-party rights. False warranties trigger indemnity for losses.
- Use of proceeds. The money goes to developing the asset, not to plugging the OpCo's old holes; a breach triggers additional rights for the investor.
- Veto and information rights. Key matters (disposal of IP, new loans, additional share issues) require the investor's consent; regular reporting is provided.
- Anti-dilution protection. Anti-dilution and pre-emption rights for future rounds.
What protects the founder
- Retained control. The investor gets a stake and veto rights, but operational management and strategic decisions stay with the founder as long as the targets are met.
- Vesting and exit terms. The parties' rights vest in stages, tied to milestones; options and exit scenarios (drag-along / tag-along) are spelled out on clear terms.
- The licence as business insurance. Even in a conflict, the OpCo keeps the right to use the asset under licence - the business does not stop.
The logic of the balance: the investor gets a transparent asset and capital protection, the founder gets money to grow and retained control over the technology. The shareholders' agreement locks this in so that any dispute is resolved by pre-agreed rules rather than "by force."
Tax and valuation: what you cannot overlook
Moving IA is not only a legal story but also a tax one. What we paid attention to:
- Valuation of the IA. An independent market valuation is the basis both for the transfer price and for the SPV's entry valuation. Overstating and understating are equally dangerous.
- Tax consequences of the transfer. Disposing of exclusive rights affects the tax base; the treatment depends on the type of asset and the applicable tax regime - we modelled it in advance to avoid an unexpected assessment.
- Licence royalties. The royalty rate from the OpCo to the SPV must be at arm's length - otherwise there is a risk of recharacterisation and transfer-pricing claims.
A common mistake. Teams move assets "between their own entities" at a nominal price, assuming that since there is a single beneficiary there is no problem. But as soon as an outside investor or creditor appears, that "cheap" transfer becomes the weakest point in the whole construction.
The outcome
In seven weeks we went from "the assets are who-knows-where" to a closed deal. The IA are gathered in a clean SPV with confirmed title; the operating company runs under licence; the investor entered the equity of the asset rather than the risks of the past; the founder kept control and gained resources to grow.
The main value of the deal was not the money itself, but the fact that afterwards it was clear who owned what and who was responsible for what. A transparent structure lifted the asset's valuation more than any negotiation over price.
Frequently asked questions
What is an SPV and why carve the intangible assets out into one?
An SPV is a purpose-built entity "for the asset," with no operating history and no debt. The rights to the IP, brand and accumulated work are transferred into it to separate the value from the operating company's risks. The investor enters a clean asset rather than a shared perimeter full of liabilities.
Can you just sell a stake in the operating company without carving out the IA?
You can, but the investor then inherits all of the company's risks: tax history, loans, lawsuits. This usually leads to a large valuation discount or a collapsed deal. Carving the IA out into an SPV removes that uncertainty and lifts the asset's valuation.
Why is it important to move assets for consideration rather than "between your own entities" for free?
A gratuitous or undervalued transfer of assets is a ground to challenge the deal as harmful to creditors, especially in bankruptcy. A transfer at a market price, with real payment and a business purpose, makes the structure resilient to challenge.
How do you protect the founder from losing control over the technology?
Through the shareholders' agreement: allocation of veto rights, staged vesting of terms, ties to milestones, options and pre-agreed exit scenarios. Plus a licence from the SPV to the operating company so the business keeps running even if the parties fall out.
How long does structuring a deal like this take?
In the case described - about seven weeks from start to closing. Timing depends on how "dirty" the original rights to the IA are: rebuilding the chain of title to the code and transferring the trademark usually take the most time.
We will help structure a deal around your intangible assets
G-Invest will gather the rights to your IP and brand, carve the assets out into an SPV, and structure the investment deal so that both sides come out protected - from due diligence to signing the shareholders' agreement.