Valuation

Raising finance

• Whilst mainstream lenders haven’t traditionally appreciated the value of IP, there are many other sources of finance that do, particularly equity funders of all shapes and sizes.

• The UK IPO’s ‘Banking on IP’ report confirmed that business angels are always interested in the role of IP in freedom to operate and barriers to entry, as are venture capital companies.

• Specialist forms of lending like venture debt, pension-led funding and asset-based finance also take key intangible assets into account.

• Having a realistic idea of IP value provides an excellent ‘conversation starter’ for negotiation, especially for high growth companies who may be reinvesting profits and thereby understating their true worth.

Portfolio assessment

• Effective international IP protection strategies usually don’t come cheap.

• Understandably, boards and shareholders have a strong interest in ensuring that IP rights represent value for money, but to assess this, they need to be able to make decisions based on future potential not just current performance.

• Valuation helps to show that properly protected IP is a value-producing asset, not a sunk cost.

• In addition, benchmarking value across different elements of a portfolio enables better-informed decisions to be made about prioritisation, where this is necessary.

Planning an exit

• Companies are generally acquired in order to gain control over their intangible assets, not their fixed ones.

• Also, where a company is acquired, international reporting standards require the buyer to take a view on what identifiable non-physical assets that business owns, and how much value should be placed on them.

• In both cases, value is very much on the minds of both seller and buyer.

• An impartial indication of the value that might reasonably be placed on these assets can prove to be a valuable negotiating tool.

We work with IP Valuation specialist companies who create a bespoke report for you and your business. Dehns can then discuss the report and its implications with you, and then guide and support you through any action you may want to take on the back of the report.