How to leverage your intangible assets to raise capital
-
Upload
metis-partners -
Category
Business
-
view
214 -
download
1
Transcript of How to leverage your intangible assets to raise capital
IP VALUATION:
How to unlock
intangible asset value
to raise capital
PRESENTERS TODAY
*Designed by Layerace - Freepik.com
KIERAN FERGUSON
IP Valuation Analyst
SAJ ALI
IP Valuation Manager
© Metis Partners 2017
WHO ARE WE?
SERVICES
Market leaders specialising in
valuing IP
REACH
Headquarters in Glasgow
Broad presence in Silicon Valley, CA
and London
TEAM
Growing multi-disciplinary team
*Designed by Layerace - Freepik.com© Metis Partners 2017
THIS WEBINAR
2
WHO NEEDS AN IP
VALUATION
1
VALUABLE IP
Poll
3
EQUITY FINANCE
Investment-Based Valuations
Case Study
4
DEBT FINANCE
IP-Backed Finance
Case Study
© Metis Partners 2017
VALUABLE IP ASSETSPoll
1
2
Software
• Highly valuable
• Can be difficult to secure
1
Patents
• Legal right • Easily identified,
separable and transferable
• All the hallmarks for good collateral
3
Trade Secrets
• Valuable if appropriately documented
• Usually utilised in conjunction with other critical IP assets
4
Brand
• Valuable only if fully registered and protected accordingly
© Metis Partners 2017
VALUABLE IP ASSETS1
INFORMAL IP
Know-howOrganisational
knowledgeTrade secrets
Proprietary software codeR&D
Brand & reputation
FORMAL IP
PatentsTrade marksDesign rights
Copyrights
OTHER
Any information/data
you would be worried about a member of staff
putting on an USB stick and walking into a competitor
with
© Metis Partners 2017
2
• Businesses rich in IP, weak balance sheet
• Businesses with strong established brands
• Start-ups/pre-revenue
• Software/tech companies
VALUING IP ASSETS Who needs our IP valuation?
© Metis Partners 2017
2
M&A IP ASSET TRANSFER
WHY GET AN IP VALUATION?
COMPLIANCE RAISINGFINANCE
EQUITY FINANCE– investment-based valuations
IP-BACKED FINANCE – recognising/valuing IP to secure debt finance
© Metis Partners 2017
2 INVESTMENT-BASED IP VALUATIONS
• Bridge the gap between book value and
market value
• Up to 80% of a company’s BV is IP
• In 2014 £133bn invested in IP – this value is
“lost” on the balance sheet
© Metis Partners 2017
3 INVESTMENT-BASED IP VALUATIONS What Do Investors Want?
1
To understand the
ability of the IP to
generate revenue
2
Confidence that the
IP secures
competitive
advantages and
creates barriers to
entry
3
To understand the
quality and the
protection of the IP
assets
4
IP development,
R&D + product
pipeline
5
To understand if the IP will
underpin the scale-up of the
business to meet a growing market demand
© Metis Partners 2017
3
• Pre-revenue start-up
• Platform for creating and distributing
virtual reality content
• Looking for funding – had zero fixed assets
• Instructed Metis to identify and value all IP
assets
INVESTMENT-BASED IP VALUATIONS Case Study – Introduction
© Metis Partners 2017
3
Using our Metisology®, we identified all IP
assets that:
• Were critical to revenue generation
• Provided a competitive advantage
• Provided a barrier to entry
Identified not only software, but trade secrets,
databases and organisational knowledge in
relation to documented procedures and
processes
INVESTMENT-BASED IP VALUATIONS Case Study – Our Approach
© Metis Partners 2017
3
• Mapped IP assets to revenue
• Provided detailed narrative on the quality
of the IP
• Compared client’s IP with comparable
licence agreements to determine a market-
based royalty rate
• Fully narrated our methodology
INVESTMENT-BASED IP VALUATIONS Case Study – Our Approach Continued
© Metis Partners 2017
3
• Valued critical IP assets at circa £8m
• IP valuation report highlighted Company’s
true value for investors
• Secured investment based on BV which
mirrored the value of the IP assets (£8m)
INVESTMENT-BASED IP VALUATIONS Case Study – Outcome
© Metis Partners 2017
4 IP-BACKED FINANCE
• IP backed finance is hugely important for
SMEs
• Finance can be based on the strength and
quality of the IP
• Using IP as collateral can improve lending
conditions
• Different forms: IP-backed loans, sale and
leaseback, pension-led finance, IP-backed
securitisation
© Metis Partners 2017
4 IP-BACKED FINANCEHere Are Some Of The Deals We Worked On
© Metis Partners 2017
LENDING-BASED IP VALUATIONSWhat do Lenders want?
2
Confidence in the
recoverable value
of the IP
1
To understand
the value of the
collateral – an
independent
view
3
A clear market
demand/secondary
market for the IP
4
4
To know the
collateral is
protected,
secured and
transferable
© Metis Partners 2017
4
• Well known musical instrument brand
• Already heavily indebted
• Needed working capital to unlock its order
book
• Instructed Metis to assess the situation and
offer solutions
LENDING-BASED IP VALUATIONSCase Study – Introduction
© Metis Partners 2017
4
• Market research identified previous M&As
within the sector
• Identified the Company’s brand as the most
valuable IP asset, valued at £250k
• Our solution – transfer of the IP and debt to
an IPCo
LENDING-BASED IP VALUATIONSCase Study – Our Approach
© Metis Partners 2017
4
• Everyone accepted the new structure
• Brand used as collateral against the debt
• Royalty revenues received by IPCo secured
to satisfy debt obligation
• Trading Co able to re-finance
LENDING-BASED IP VALUATIONSCase Study – Outcome
© Metis Partners 2017
5 KEY TAKEAWAYS
1 2 3 4 5Don’t discount
the value of your formal and
informal IP
Understanding and
communicating your IP to
investors can help raise your
business valuation
Investors want to know the IP
is well protected, robust and underpins
scalability and revenue growth
In the right circumstances,
lenders can find IP just as
valuable, if not more valuable, than physical
assets.
Lenders want to know if
they can take security and control over IP assets and
have confidence a
secondary market exists
© Metis Partners 2017
THANK YOU!
We are available to discuss any of your IP
needs in more detail, so please get in touch!
Kieran Ferguson [email protected]
or
Saj Ali
0141 353 3011
NEXT WEBINAR:
•
© Metis Partners 2017