The Client

An established member society aimed at keen whisky drinkers had undergone a change in ownership and required an IP valuation to support a purchase price allocation (PPA) for financial reporting purposes. The Company, previously owned by an iconic whisky producer, had built an international membership of 30,000 over 30 years. It sourced whisky from various distilleries, blended and bottled under its own premium brand for events and for sale to its members. A change in strategic direction resulted in the Company being sold to a group of private investors.

The Assignment

Metis Partners was referred by the Company’s auditors, who were conflicted and could not perform or advise on the IP valuation. The Company needed an independent IP valuation of the IP acquired, which would enable the auditor to rely on the PPA in the course of the year-end audit.

Our Approach

We adopted our unique information discovery process, Metisology®, to identify all the IP assets vesting in the business at the date of acquisition. We assessed which of these assets were critical in underpinning revenues and competitive advantage and narrated these in terms of the accounting definitions to meet the reporting requirements. We captured and narrated as many external sources as possible for our valuation inputs to ensure the auditor could easily assess and verify our key valuation assumptions. Our report provided a full narrative on the extent and quality of the IP assets, their eligibility for meeting the definition per the accounting rules, mapped the IP to the various revenue streams and demonstrated the critical IP that provided the Company with its competitive advantage.

The Outcome

We delivered an independent valuation of the IP assets acquired and also advised on the estimated economic useful lives of each IP asset to inform the Company’s amortization policy. The auditor had assurance that the IP value stated in the financial statements was arrived at by an IP specialist with rigorous and professional standards and had a detailed report that included calculations and assumptions that were easily audited. Our IP valuation achieved auditor sign-off and withstood third-party scrutiny, including from tax authorities. Critical IP Assets Valued – (as per accounting classifications) Customer-related intangibles, marketing-related intangibles, contract-related intangibles.