Download IP asset rating

Creations of the mind
© Metis Partners 2012
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© Metis Partners 2011
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IP assets under the skin of every business –
need to look for them………
… to understand what you have and
don’t
have
compare
to
competitors
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IP Monetisation alternatives
• Universities / Inventors: commercialisation platforms
• Large Co :
IP sale & leaseback - Ocean Tomo Europe
Out-licensing into non-competing markets
Outright IP sale
IP (patents) assertion
• SME:
© Metis Partners 2011
min £1m turnover – Metis way!!
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Patents &
software
Competitive
Advantage
WHY else? ... recovery £££ value in selling
IP assets
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Brands – always UNDERVALUED!
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Patents
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UK & Community trade marks / designs
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Customer databases (sold and valued)
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Software products
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Software systems
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Process (manufacturing) information
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Know-how (and negative know-how)
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R&D and tax credits
© Metis Partners 2012
IP valuation ….. like men vs women
........we all see things differently!
© Metis Partners 2011
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VALUATION – Funders TRUST
“in situ” valuation ...WHY?
• Not “black box” hypothetical valuation
• Linked to current turnover / revenues of business
• Relies on a “rating” of IP assets
• Incorporates distressed / insolvency sale value £
• reasonable royalty rate based on IP asset rating – high vs low
© Metis Partners 2011
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IP Asset value indicators – funders
• Low Value – Recognition of
critical know-how in business
• Low Value – unregistered
TM/logo use
• Medium Value – protection of
key know-how /TS behind
competitive advantage
• Medium Value – TM’s ® &
awards and broadened reputation
• High Value – JVs /
collaboration , sharing know-how
e.g manufacturing case study
• High Value – expanding online
or into new markets / channels
e.g. musical instrument case study
© Metis Partners 2011
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IP Asset value indicators (2) – funders
• Low Value – patents, software,
TM’s ®
• Low Value – image
enhancing customers
• Medium Value – key patents &
software protection
• Medium Value – customer
loyalty & stickiness
• High Value – out-licensing non core • High Value – customer
& IP assertion / infringement
reliance or tribal knowledge to
/ from customers
e.g. restaurant case study
e.g recruitment case study
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£1m t/o business
Balance sheet
Trade
Co
£000
PPE
215
Current assets
50
Total assets
265
Equity &
liabilities
Total equity
245
Current liabilities
20
Total equity &
liabilities
265
© Metis Partners 2010
Off B/S
IP assets –
brand,
patents,
software etc.
IP asset rating –
royalty rate 9%
IP valuation
“transaction
price” £150k
Balance sheet
NEW
IPCo
£000
Intangible assets
150
Current assets
20
Total assets
170
Equity &
liabilities
Total equity
150
Current liabilities
20
Total equity &
liabilities
170
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£1m t/o - transaction IP valuation £150k
Balance sheet
£000
PPE
Balance sheet
Trade
Co
200
IP valuation
“transaction
price” £150k
IPCo
£000
Intangible assets
150
Current assets
50
Current assets
20
Total assets
265
Total assets
170
Equity &
liabilities
Total equity
245
Current liabilities
20
Total equity &
liabilities
265
© Metis Partners 2010
Equity &
liabilities
On B/S
IP asset
security for
funders
Total equity
150
Current liabilities
20
Total equity &
liabilities
170
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New IP asset cashflow valuation £300k
Balance sheet
Trading
Co
£000
PPE
215
Current assets (incl. new
IP debtor OR cash)
200
Total assets
415
Equity &
liabilities
Total equity
395
Current liabilities
20
Total equity &
liabilities
© Metis Partners 2012
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IP asset rating / value
improvement work –
13%Balance
royalty sheet
rate
IP Licence – bank
lend against 2.5 times
annual (royalty)
revenues
£130k pa
x 2.5 =assets
£300k
Intangible
NOT against
Current
assets
transaction
valuation
£150k Total assets
NEW IPCo
£000
150
20
170
Equity &
liabilities
Total equity
150
Current liabilities
20
Total equity &
liabilities
170
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Bank / Investor benefits
Benefits
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Security over critical IP assets now on B/S of IPCo
Visibility of dedicated cash flow to repay debt
Company focus on cash flow value of IP assets
Attract private investors/partners
Observations
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Identify IP assets considered critical to the business
IP often not secured nor valued by bank / investors
Intangibles can be worth as much or more than trading business
Identify buyers for IP assets in advance – M&A / competitors /
partners / customers
© Metis Partners 2012
Restructuring options – bank benefits
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New & improved security – more control over business/management
Hive off – no shadow director issues for bank
Conditions precedent & subsequent – bank have REAL influence
IP asset package & disposal - neat and quick (weeks not months)
Enhanced recovery – accelerated disposal / pre-insolvency
Stephen Robertson
[email protected]
Tel: (+44) 0141 353 3011
www.metispartners.co.uk
@metispartners
© Metis Partners 2012
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