An audio technology company involved in the research, development and licensing of codec technologies, allowing end users access to studio-grade sound quality, whilst optimising data usage for efficient performance. The Company licenses its technologies and associated IP assets to record labels, music distributors, and manufacturers of playback devices, and has established strategic partnerships with major streaming services. The Company’s technology has also been adopted by major record labels including Warner Records, Sony Music, and Universal Music Group, as well as independent record labels.
The Company faced financial difficulties due to being loss-making for a number of years and significant R&D costs incurred. The withdrawal of financial support from its investors further exacerbated the Company’s cashflow, and the Company entered into administration. We were engaged by the Company’s administrators to provide a distressed IP valuation of each of the Company’s two key audio technologies, in order to estimate their likely value in an insolvency scenario and to assist the administrators to appraise potential offers for the Company's IP assets.
Recognizing that the Company had not fully commercialized its latest technology innovation, we determined that the cost approach was appropriate in valuing the Company’s IP assets. Utilizing our Metisology® approach, we conducted an in-depth Information Discovery process in order to identify the key IP assets relevant to the valuation. We relied on our experience in this sector and benchmarked the IP assets against similar IP we had previously appraised and valued. This was crucial, in order to separate the IP underpinning the Company’s two key technologies. The Company owned an extensive portfolio of registered IP in the form of brand-related assets and patents, as well as proprietary software, the development of which was well-documented.
We also conducted desk-based market research in order to understand the market in which the Company’s technology was to be deployed, the competing technologies available and the commercial and price-related dynamics between the market players, such as record labels, technology providers, hardware manufacturers and end consumers. Our Information Discovery exercise also revealed that the IP did not underpin any guaranteed recurring revenues and required further significant investment to be fully commercialized. Based on our assessment, we determined that there was no easily accessible route to market for the Company’s technology, thereby negatively affecting the likely IP buyer appetite and product opportunity, despite its position in the market.
We delivered an IP Valuation of each of the Company’s two key audio technologies, reflecting the expected amount that may be reasonably expected to be realised from the sale of the assets in a highly-accelerated auction. We delivered our report to the Company’s administrators, providing them with distressed valuations on both Orderly Liquidation and Forced Liquidation bases and the critical key factors that drove our opinion which was used to appraise potential offers.
