Page 8 - The Katten Kattwalk - Fall 2024 - Issue 28

Creative License: The Sale and License-Back Structure (continued)

In addition, the accompanying license to design, day-to-day management of the parts of the brand’s
distribute and/or manufacture products using the sold business operating under the new license. It also
intellectual property allows the seller to continue to allows the seller to put the newly obtained capital to
operate the business of the brand, or parts of it that good use elsewhere in the business — for example, by
remain profitable (or potentially profitable), following paying down existing debt, improving general liquidity
the conclusion of the transaction. Crucially, this means or funding future turnaround plans.
that beyond the payment of royalties, sellers are not In a fashion market characterized by varied and
required to sacrifice the income from their operation
of the brand in question. wide-ranging challenges, the sale-and-license-back
deal structure may represent a mutually beneficial
This allows for a business-as-usual approach to the approach for investors and brand operators alike.

8 katten.com/fashionlaw