Metis Partners was referred by the Company’s legal counsel to provide an opinion on IP value when the Company entered financial distress. The Company was an indirect subprime lender for customers seeking to buy automobiles and provided credit financing to applicants with either no credit history or limited access to vehicle financing. At its peak the Company was generating circa $5m revenue.
Metis Partners was engaged to perform an IP Valuation and to deliver our ‘Opinion of Value’ to support the Company’s restructuring. We were advised that the Company was in financial distress and had filed for Chapter 11 Bankruptcy, whilst continuing to trade.
The Company had a track record and reputation in the market, and had protected its brand and logo with registered trade marks. However, our Metisology® approach discovered that the Company’s database and trade secrets were, in fact, the most critical IP assets underpinning its competitive advantage.
The Company’s customer database held circa 3k entries, with 500 of these relating to ongoing credit arrangements with customers. Each entry held data relating to the creditworthiness of applicants and contained several hundred variables. Given its scale and depth, it was estimated that a new market entrant would likely require 4-5 years to generate an equivalent level of commercial data.
We also identified that the Company had documented extensive organizational knowledge, including proprietary risk-calculating scorecards which were central in determining applicants’ creditworthiness. After assessing the level of internal protection that the Company was enforcing, these scorecards were deemed to be trade secrets.
We were able to assist the Company with its restructuring plan by:
- performing a valuation of its critical IP assets, conducted on a fair market value basis to account for the fact the Company continued to trade during the formal process;
- submitting our declaration regarding our Opinion of Value to the Court for consideration; and
- delivering Expert Witness Testimony in a deposition with creditors’ counsel in respect of our Opinion of Value.
IP assets valued: Database, Trade Secrets, Brand & Trade Marks, Key Organizational Knowledge
