In this challenging financial climate, IP assets are capable of transforming funding options available to businesses, particularly as finance providers increasingly recognise the ability to take security over these valuable assets under different corporate structures.
Metis Partners has been carrying out a variety of IP valuations for clients in different scenarios in order to:
We can also provide strategies related to value release options in distressed scenarios. Below are some of the applications of IP Valuation services offered by Metis Partners:
Raising finance can be challenging in the current climate given the uncertainty in the marketplace around traditional securitised assets such as land & property. While these are readily understood by lenders and reliably valued, banks are increasingly averse to risk in asset-based finance. However, if a company’s competitive advantage is adequately protected by its IP assets, and it can be demonstrated that they underpin revenues and forecasts (and that competitors lack equivalent IP assets), banks or investors will consider taking security over them. Furthermore, banks have been more inclined to take security over IP assets when they can see possible recovery value from the sale of these assets in a distressed or insolvency scenario.
As a growing organisation – perhaps with different divisions or business streams – investment in the future can be costly, especially since successful innovation and entrepreneurship often results in some failures prior to success. Although it may not present immediate issues, a balance sheet deficit on year-end accounts can adversely affect a company’s credit rating. Metis Partners has a proven track record in valuing unrecognised IP assets for the purposes of an internal sale/transfer, thereby realising that value on a company’s balance sheet. Metis Partners has helped monetise and securitise a number of critical IP assets, including brands, trade secrets, customer contracts, software, patents and critical technical specifications.
The ability to manage existing debts amid changing market conditions is a constant challenge, and businesses are acutely aware of the danger in breaching banking covenants. Metis Partners provides innovative solutions to alleviate pressure on companies in this situation. We first carry out an analysis to demonstrate that critical IP assets, without which the company could not operate, have been protected. Metis Partners then advises the company on the creation of new corporate structures to enable refinancing, whereby debt can be transferred to an IP holding company where the bank (which now understands the value of these critical intangible assets) takes security over the IP.
With FRS 102 becoming the main new UK GAAP standard, accounting for business combinations has changed. Companies are now required to recognise all intangible assets that have been acquired as part of a business transaction.
Whether adopting FRS or IFRS, all companies making an acquisition must now fully recognise all assets and liabilities acquired at their fair value, to assist in arriving at the goodwill figure on acquisition. The result is likely to be a lower value attached to goodwill and many more intangible assets appearing on group financial statements in the UK. Intangible assets are relatively unfamiliar to accountants, which proves problematic when valuing and estimating their economic useful lives, which must be recorded on company accounts.
Metis Partners has adapted its valuation process to specifically meet PPA/auditor needs by:
Why use us:
We recently took the opportunity to review some of our PPA valuations to date, and have highlighted our main findings in an infographic, to provide insights around recognition, measurement and potential over payment. Click the link here to see our recent infographic.
The benefits of a separate IP Holding Company (“IPCo”) structure:
We have advised on growth finance deals where IPRs have been taken as security by investors leading to over £tens of millions of new investment in SMEs. For further information on IP valuations, please contact Stephen Robertson on 0141 353 3011.