A group of companies operating in building supplies market for almost 50 years, had developed a low-carbon cement alterative. It had successfully proven the performance of its proprietary material in civil engineering and construction projects, including with governmental agencies and Tier 1 contractors. The patent-backed proprietary material had generated minimal revenue at the date of valuation. Having experienced delays in the global supply chain as the aftermath of the Covid-19 pandemic and the conflict in Ukraine, the Group experienced liquidity issue and therefore was in financial distress. The Company was exploring a potential carve-out of this proprietary technology and related IP to generate some much-needed working capital.
We were instructed by the Group to provide a distressed IP valuation on Orderly Liquidation Value (OLV) and Forced Liquidation Value (FLV) bases, which will be relied upon by the Group and its restructuring advisors during an accelerated M&A process to inform offer appraisals.
Despite the Group’s IP being fully developed and having gained initial commercial traction, it had only generated minimal revenue to date. We therefore concluded that an income approach was unlikely to provide a reliable valuation for price formation, and instead adopted a cost approach, which would better reflect the maximum price a buyer was willing to pay to acquire the solution.
We utilized our proprietary Metisology® to carefully separate the IP relating to the new tech from the IP used by the existing trading entities. This was extremely challenging as the technology had been developed over 10 years. We identified the IP assets included a patent portfolio and related key organizational knowledge, which included testing data. These critical IP assets would be required by any potential acquirors in order to manufacture the Group’s product.
Our IP valuations are backed by extensive business and IP diligence. As part of this we conducted desk-based research to identify key economic and industry drivers that may influence the demand for the Group’s products and the IP that underpins them. This enabled us to consider the matrix of new technologies developed in the cement/concrete industry and identify likely acquirors based on the market dynamics, ultimately determining how the IP may appeal to acquirors, and ensuring our distressed valuations reflected market conditions.
We provided OLV and FLV intellectual property valuations, on a highly accelerated basis, to the Group and its restructuring advisors. Our IP valuation was critical to the accelerated M&A process.
IP Assets Valued: Patent Portfolio, Key Organizational Knowledge.
