An innovation-focused, multi-channel manufacturer and supplier of tech-rich bedding products, headquartered in New York. The Company was generating annual revenues of circa $100m pre-COVID and supplied white-labelled goods to leading homeware retailers such as Bed, Bath & Beyond, Macy’s and Kohl’s. Although operating predominantly on a B2B basis, the Company developed a portfolio of consumer brands which it marketed directly to consumers to drive demand and secure higher than average margins.
The Company was in financial distress and working closely with their restructuring advisers, we were engaged by the Company to perform a valuation of the IP portfolio on a distressed basis, to support its re-financing negotiations with lenders.
Utilizing our Metisology® approach, we were able to break down a complex IP Portfolio and determine which IP assets were underpinning the Company’s financially material revenue streams. We identified that the Company’s corporate brand had secured a reputation in the market as an innovator and its quality products had earned the trust of high-profile consumer goods retailers that generated recurring revenue from its white label products, significantly reducing the customer acquisition cost.
The Company had cleverly created an ‘ingredient brand’ for its innovative cooling technology which was able to be prominently displayed on its white label packaging without encroaching on the product brands of major retailers. This enabled the Company to generate considerable consumer goodwill for its own technology brand. Furthermore, we found evidence that this technology brand was securing premium pricing. This enviable market position resulted in an approach from another manufacturer who wanted to license the technology and the related brand, generating around $1m of licensing revenue, which significantly improved the Company’s margins and IP valuation.
The Company also owned a substantial bundle of critical organizational knowledge relating to internal operating procedures and product manufacturing specifications, which we found to be critical to both manufacturing operations and meeting fire and safety regulations.
We delivered, what was described by the lender, as a “thoughtful” IP Valuation on an orderly liquidation value (‘OLV’) basis. We identified not only a range of IP assets but also the key factors that would influence the recovery value in an accelerated sale. We highlighted which IP assets could be packaged together for ease of transfer, in order to maximize and preserve value. The OLV reflected the likely value of the IP assets in an accelerated sale scenario. The Company relied on our report to approach lenders to secure bridging finance with stretch against the IP assets.
IP Assets Valued: Brand, Trade Marks, Content-rich Websites and Domains, Key Organisational Knowledge, Patents.