An international shoe retailer with turnover of $150M with products sold in more than 60 countries. This retailer has no property portfolio, instead it invests in its IP to support both its product expansion and its global reach. The Company has a 15-year track record of designing patent-backed shoe designs and reaching a loyal customer base through multiple revenue channels, including ecommerce and a successful international online and offline franchise model.
Like many retailers, the revenue generated from in-store purchases was impacted by the COVID-19 pandemic, but the Company was ahead of budget for online sales. Management was quick to react and created a restructuring plan to pivot the business model to increase focus on its ecommerce offering. The key operating assets of the business were all IP assets and so Metis Partners was engaged to provide IP Valuations to inform Management’s decisions on restructuring, and to provide transparency for their lenders.
We valued the entire IP portfolio but our detailed IP analysis on each critical IP asset was vital to our client, as it provided a much-needed narrative on their key operating assets, which did not appear on their financial statements. Our report demonstrates the investment the Company made in IP and how that provides a competitive moat around the business, protecting the future cash flows. Critical IP included:
- patent-backed technology that is integrated in its designs. This technology both enhances the brand positioning and enables the Company to charge a price premium;
- valuable customer database used for direct marketing and which provides evidence of high number of repeat customers, making future cash flows more predictable; and
- an extensive bank of key organizational knowledge covering all aspects of the business including, manufacturing specifications, quality control procedures and standards and detailed brand guidelines which supports its international franchisees.
We performed IP Valuations on three different bases, which provided the Company with a detailed narrative about:
- the extent, quality and value of its IP as a key operating resource in the current going concern scenario to inform their decisions about changes to their business model and strategy
- the likely value that would be recoverable from the IP Portfolio both in an accelerated M&A scenario and an IP asset sale, to provide lenders and investors with information to enable them to confidently consider lending limits and covenants.
A success story! Lenders have relied on our valuations and this nimble, IP-rich retailer has successfully pivoted and traded through the economic shutdown.
IP Assets Valued – brand and portfolio of trade marks, patent-technology, designs, customer database and extensive organizational knowledge.