What is a Syndication?

What is a Syndication?

A Syndication is a group of individuals or entities that come to together to pool their resources to share in the ownership of a common interest asset. The expenses, income or profit generated by the common interest asset are shared by the syndicate owners in accordance with the syndication agreement.

The Syndication is managed by a Syndicator on behalf of the Syndication shareholders.

The most common type of syndications are for horses and real estate.

The main benefits of Syndication over direct ownership are;

  • The costs are lower as you are only buying a share in the asset not the total asset.
  • The ongoing maintenance costs are lower as you are only paying your proportion of the cost rather than the entire maintenance cost.
  • Lower costs allow participation by a greater number of parties or individuals.
  • The resources and experience of shareholders can be pooled together to the benefit of the asset that otherwise may be lacking from direct ownership.
  • It provides a capital risk management strategy by reducing exposure to an asset.
  • A syndication share can be sold potentially at a profit to a willing buyer and any profit/loss relating to the sale of syndication share is allocated 100% to the Syndication shareholder.

So What is Patent Syndication?

Patent Syndication operates in a similar manner to a normal syndication and is simply a group of individuals or entities that come to together to pool their resources to share in the ownership of a patent within a country, with the aim of benefiting from the patent from either the creation of capital gains as the patent value rises as it progresses through the various stages of development of the patent or alternatively benefiting from the utilization of the patent within a business or for personal reasons.

The expenses, income or profit generated by the patent are shared by the syndicate owners in accordance with the syndication agreement.

The Syndication is managed by a Syndicator on behalf of the Syndication shareholders.

The Syndicate is not a separate taxpaying entity, nor is it a partnership entity, and each co-owner is responsible for filing his or her own tax return in which deductions may also be able to be made in the relevant countries or economic zones.

An extra feature of patent syndication is that each syndication share come with the right to license or use the patented technology.

For further information on how a Patent Syndication works please Click Here.