A British lifestyle high-street and eCommerce retailer with a rich brand history and international presence, generating in excess of £200m revenues annually through retail, wholesale, licensing and operating an online marketplace for third-party retailers. The Company designed all of its products in-house and owned an award-winning corporate brand with significant brand exposure in the UK and internationally.
We were introduced by Interpath to assist the Company in identifying and valuing its critical IP assets on a distressed basis to support an estimated outcome statement for a potential restructuring exercise.
Award-winning Brand: We valued the Company’s IP on a forced liquidation value (or ex-situ) basis. Using our Metisology® approach we explored the brand’s history, exposure and reputation and assessed how the brand was protected, managed and leveraged in the Company’s operations and externally through licensing to third-party high-street retailers. A major driver of IP value was how the brand had been leveraged to both diversify and increase revenues, protect margins and remain resilient during Covid-19.
Critical Customer Data: Our diligence identified that the Company also relied on an extensive customer database which was critical to maintaining customer engagement, whilst its retail stores were closed during the pandemic, and which in fact had been instrumental in successfully driving higher than expected growth, through its eCommerce platform.
Assessment of Recoverability: The Company had invested tens of millions in the development of proprietary software & customizations to third-party software, to better support operations, store and inventory management. Despite this significant investment, our experience in selling IP assets from insolvency combined with our IP and commercial diligence, led us to a conclusion that these IP assets were unlikely to represent, nor recover, significant value in an insolvency scenario. The Company’s reliance on third-party software and complex integrations was unlikely to be of major interest to a buyer on a break-up sale basis.
We delivered a highly referenceable IP valuation, that included a narrative on the extent and quality of the Company’s IP assets. Our opinion on the issue of value recovery was important considering the significant intangibles reported on the balance sheet, which could have contributed to value on an OLV basis, but had little value on an FLV / ex-situ basis.
In arriving at our ‘Key Factors in Our Opinion’ we relied on our extensive experience in both Business & IP sales, as well as Insolvent IP sales from bankruptcy. It is vital to conduct the necessary IP and commercial diligence in order to determine key valuation reference points – those that a buyer would take account of – and in this case there was a material difference in the value of the Company’s IP on a break-up basis versus a trade sale. Our opinion turned out to be accurate as a trade buyer behaved more like an opportunistic buyer, acquiring only the brand-related IP assets.
IP Assets Valued: International brand, trade mark portfolio, customer database.