The Lender required an Intellectual Property Valuation Opinion™ of the critical intellectual property (“IP”) assets of the Company. The Company is a UK-based producer of premium bread and other bakery items with revenues of over $350m, with a rich 100-year history of prioritizing quality and taste. The Company commits millions to R&D, innovation, and product development, as well as securing and protecting its market-leading brand.
Like many businesses, the Company invests heavily in innovation and its IP assets and yet this ‘investment’ is lost as it is classified as expenses in the P&L. The Company recognized that its brand assets were the key driver for securing its competitive advantage – they have built a market-leading brand that is associated with innovation, premium quality, and taste, enabling it to secure recurring revenues and command a price premium. We were engaged by the Client to conduct an independent valuation of the IP assets in an insolvency scenario, that the Company could use in its discussions with its current lender for refinancing purposes.
We valued the IP portfolio on an orderly liquidation and forced liquidation value bases. Using our Metisology® approach we identified a portfolio of IP assets including brand and key organizational knowledge that underpin its main product offerings, the Company’s critical business operations and material revenues. We also performed a deep dive into how the IP assets were developed, managed, and protected. Additionally, we assessed the Company’s brand strategy and brand protection activities that supported both brand image and its routes to market. The key findings were benchmarked against our proprietary brand scorecard as a key valuation input and gauge the brand’s position in the market segment and the wider food and non-alcoholic beverage industry.
Using internationally accepted valuation methodologies, we delivered a valuation of the Company’s IP assets underpinning the business. Our report included an IP narrative that explained the extent and quality of the IP assets in the business, which the Company could use to demonstrate their importance in providing a competitive advantage and supporting revenue generation. Our ‘downside valuations’ gave the lender the comfort they needed that value could be recovered from the sale of the IP assets as collateral in an insolvency scenario. The report additionally highlighted key factors that were likely to appeal to IP buyers and both drive and preserve the value of the Company if it entered into insolvency, based on our experience of valuing and selling IP and our knowledge of corporate restructurings and M&A in the sector.
The Company can now confidently discuss the value of its brand with its lenders, gaining clarity over the value of the IP assets backing its business and supporting revenue generation. In addition, the Company is now equipped with an IP narrative that provides additional transparency for lenders ahead of its planned refinancing.
