Client

Content creator for interactive software platforms

Background

The Company specialised in creating branded and original content for interactive software platforms on consoles and handheld gaming devices, and had created a significant catalogue of proprietary virtual items since its inception. In response to a changing market landscape, the Company decided to create a new business proposition which would capitalise on the expertise and work it has already carried out.

Assignment

As part of its growth strategy, the Company sought to identify the breadth of the IP assets vesting in the Company, and itemise and value its intellectual property portfolio in order to strengthen its value proposition and attract additional investor funding.

In light of these objectives, Metis Partners undertook an IP Audit in order to identify relevant IP assets which underpin the Company’s competitive advantage, with a focus on identifying areas of weakness and risk where IP asset value could be compromised in an exit scenario. We subsequently provided a valuation of the IP assets in order to support the Company’s value proposition and present to prospective investors.

 

Our Approach

Metis Partners conducted an on-site day with management and key personnel, which consisted of:

  • a Company presentation followed by a Q&A session in which we focus on business differentiation and competitive advantage in order to identify any potentially valuable IP assets which may have been neglected by the Company in the past;
  • a “whiteboard session,” in which we map the Company’s IP assets and link them to products/services as well as revenues and forecasts, which gives us the opportunity to visualise the critical IP assets upon which the Company rely; and
  • a group Q&A session with members of the Company’s key personnel, during which we run through our proprietary “Metisology™” process in order to understand what other, if any, IP assets exist that have not yet been covered.

In addition to the portfolio of virtual items, we identified numerous IP assets such as trade secrets, comprised of various pieces of source code and three-dimensional object design files, associated script and a significant amount of organisational knowledge underpinning the virtual items and virtual worlds the Company had created, as well as the Company’s brand, branded website & domain names and marketing materials.

Financial analysis in respect of the identified IP assets was then carried out using the most appropriate financial modelling methodology, which in this case was the Relief from Royalty method, using an independent, comprehensive and verifiable “royalty rate data” provider in order to identify licensing transactions and other agreements which may have aspects of comparability to the proposed transaction, and which can be used to assist in our valuation conclusions.

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The Outcome

Our IP Audit identified critical IP assets which the Company had previously overlooked or undervalued, providing it with a greater understanding of the intellectual property which vests in the Company and provides it with its competitive advantage.

  • Our IP Audit also provided the Company with advice on how to mitigate identified risks and improve the value of these IP assets, which has strengthened the Company’s overall value proposition in advance of planned investment activities.
  • The independent valuation of the Company’s key selected IP assets gave it the ability to recognise the value of such IP assets, particularly where they had been undervalued to date, and gave the Company a reference point for investors when discussing raising additional finance.

Photo credit: Leon Brocard