A UK-based developer of an innovative AI-powered business intelligence (“BI”) platform. The Company’s BI platform has the capacity to collect and analyze large volumes of ‘consumer review data’ and assess its authenticity with a high degree of accuracy. Initially specializing in the provision of bespoke website development solutions for SMEs, the Company began to experience financial difficulty as a result of lower-than-expected revenue. As a result, in 2021 the Company shifted its focus to the development of its BI platform. The platform was pre-revenue as at the date of valuation, however had been supported by circa £20m in funding.
We were engaged by the Company to provide a distressed IP valuation and a bespoke ‘IP Sale Opinion’ when it experienced financial distress, in order to support a potential emergency fundraise and IP sale.
Recognizing the pre-revenue nature of the platform, we determined that the cost approach was appropriate in valuing the Company’s IP assets. We utilized the depreciated replacement cost methodology, which represents the cost to recreate the platform, at current prices, to its current standard and functionality, assuming development commenced at the date of valuation.
Utilizing our Metisology® approach, we conducted an in-depth Information Discovery process in order to identify key IP assets relevant to the valuation. This was crucial, in order to separate the IP underpinning the Company’s key BI platform, which had been its focus since 2021. We identified that the Company owned software, algorithms and brand-related assets. Its software was well-documented and highly transferable, which would appeal to potential buyers in an accelerated M&A scenario. The brand and trademarks underpinning its BI platform have only been deployed for under a year, and therefore we assessed that they were unlikely to be the key IP value drivers.
We conducted desk-based market research on the likely buyer appetite for the Company’s platform, and reviewed recent legislative changes which might provide a significant market opportunity for the Company’s product. Based on our research and assessment, we determined that the likely IP buyer appetite and product opportunity were negatively impacted by a number of factors, including: the Company’s modest trademark portfolio; lack of imminent relevant demand; and general economic instability in the marketplace.
We delivered an IP Valuation, reflecting the likely value of the Company’s IP assets on an in-situ and ex-situ basis. We also provided the Company with an IP Sale Opinion, utilizing our significant experience of selling IP assets from solvent, distress and insolvency scenarios in order to provide unique insight into the likely sale value of the Company’s IP assets in a going concern scenario. Our valuation and IP Sale Opinion assisted Management and their restructuring advisor in informing strategic decision-making in advance of the Company entering administration.
