The Client
A tech-based multimillion-dollar consumer products company was looking to differentiate itself in the market and had identified a “Target” that has developed an IoT software solution, that is expected to be hugely disruptive in the smart-cities sector. The IP now had immediate demand as a result of the COVID-19 pandemic, with property owners now under increasing pressure to demonstrate safer and cleaner working environments and smart building technology that can monitor airflow and space and power usage, helping businesses meet environmental targets are now in high demand.
The Assignment
The Client recognized that the Target had invested $millions in developing a unique and innovative IP portfolio required further investment to fully commercialize it. The Client wanted to know what it would cost to recreate this IP portfolio – to ensure they were not overpaying. The Client also wanted an estimate of the fair value of the IP on an income basis, and our opinion on what IP assets would genuinely underpin the cash flows and provide protection to them in the short to medium term, until the IP was fully integrated into the Client’s business.
Our Approach
We adopted our Metisology® to identify all the IP vesting in the Target, establishing ownership and mapping to material revenue streams, both historic and forecast. This was complex as the Target had been investing and developing business technology systems over four years and had created a rich IP portfolio including software, hardware, patents, trade marks and key organizational knowledge. It included smart building technology that was already being commercialized, and hugely disruptive IoT software and hardware that was yet to be taken to market. The Target had invested in a focused and impactful brand strategy, but this was complicated by a high-profile corporate partnership that was the Target’s main route to market. Our analysis was focused firstly on ringfencing the IP assets owned and utilised to date and then exploring the industry opportunity for the disruptive software and hardware solutions that had been developed.
The Outcome
We delivered two IP valuations for the Client. The first one was an estimate of the reproduction cost of the IP portfolio being acquired, as $millions had been invested in developing innovative IoT solutions, but only logistics-related software had been commercialized to date. This valuation was relied upon to inform the acquisition. We also delivered a fair value of the IP portfolio based on the plans to commercialize the entire IP portfolio that was transferred, including patented technology that had licensing opportunities. Critical IP Assets Valued – Software, Patents, Trade Marks, Key Organizational Knowledge.