A market-leading online retailer providing time-limited, members-only private sales of premium branded products across categories including womenswear, menswear, homeware, beauty and lifestyle. The Group’s history dates back to the early 2000s and operates primarily in the UK and Europe. It had been proactive in acquiring both competing and complementary businesses: acquiring online retailers to expand its customer database and logistics operators to streamline its operation. As is often the case with Groups that grow by acquisition, IP assets were now held across a number of entities and the Group needed to consolidate its IP, to facilitate IP management and IP protection, prior to fundraising.
The Group engaged us to provide two IP valuations each on a fair value basis, in relation to: (i) identified IP assets held by one of its European subsidiaries, and (ii) all IP assets utilized and relied upon by the Group for fundraising purposes. In addition, we delivered an IP valuation on an Orderly Liquidation Basis (OLV) to inform its discussion with its lenders for possible bridge financing.
Using our Metisology® approach we identified the IP assets owned by the European entity and by the Group. We discovered that the European entity held critical registered trademarks in relation to the Group’s corporate brand, which other Group entities were using under license. The other IP assets owned and relied on by the Group include registered trademarks in relation to secondary corporate brands, proprietary software, and critical and extensive customer databases.
We conducted comprehensive IP and business diligence to understand how each IP asset was utilized to support the Group’s business model and strategy. Our analysis on the Group’s extensive customer database provided evidence that this IP asset was a key driver of revenue. We relied on our experiencing of valuing IP assets in the sector and benchmarked the key customer metrics we found clear evidence of significant brand loyalty that underpinned tens of millions of revenue from returning customers. The brand had also earned reputational benefit from its longstanding relationships with premium fashion houses and consumer brands, which secured the Group’s market position as a third party retailer.
To support our valuation process of the OLV valuation, we explored the extent to which the Group’s IP portfolio was transferable in a hypothetical accelerated M&A process. We conducted economic and industry analysis to understand the drivers influencing the retail sector and especially the factors influencing recent M&A transactions. This, in addition to our proprietary database of IP sold from retail from distressed scenarios, enabled us to ensure that our justification for valuation inputs were commercially sound. Based on market data, we observed that the Group’s customer database would likely attract significant buyer interest in an M&A scenario due to the profile of its target consumer group and the high customer retention rate achieved by the Group. This would likely preserve IP value in an OLV scenario.
The fair value IP valuations assisted the Group in its transfer of IP assets and fundraising from retail activities, and the OLV valuation armed the Management team with invaluable insight prior to discussions with its lenders.
IP Assets Valued: Brand and related assets including registered trademarks, websites and domain names, customer database, and software
