Valuation and Monetization
         of Corporate IP
     ICLE Intellectual Property Spring Seminar
                       ...
Who Cares About Maximizing IP Value?

Merger and              Other Stakeholders
Acquisition Interests   Internal Asset Ma...
Asset Groups that can be Monetized

  Patents                   Internet Assets
  Technology                Copyright Port...
Bundles of Intangible Assets
        Marketing Bundle                  IT Bundle                   Technical Bundle

Prima...
Licensing Royalty Rates
                                                            Royalty Rate Distribution
There is no ...
Effect of Parties Relationship on
          Trademark Royalty Rates
           International Corporate Brand/Trademark Roy...
The Process of Extracting Value

Timing

Setting

People

Paper



                                   13




    Value Ext...
Disposition

Auction

Sale

Competitive Disposition

Merger & Acquisition


                            15




           ...
Leverage

Traditional Licensing

Other Licensing Models

Joint Venture




                                17




  The Ne...
Value Maximization Case Studies
 Licensing                     IBM, Kmart
                               Collins & Aikman,...
Standards of Value

Fair Market Value
• The price at which property would change hands between
  a willing buyer and a wil...
Statistical Valuation (cont.)

We have developed a model that calculates
trademark values as a function of:
• Annual sales...
QUESTIONS AND ANSWERS




                        25




                             13
Upcoming SlideShare
Loading in...5
×

Valuation and Monetization of Corporate IP

1,775

Published on

Published in: Business
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
1,775
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
136
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Transcript of "Valuation and Monetization of Corporate IP"

  1. 1. Valuation and Monetization of Corporate IP ICLE Intellectual Property Spring Seminar March 16, 2009 Presented by: Weston Anson CONSOR Intellectual Asset Management 800.454.9091 www.consor.com Five Critical Elements of Value Maximization 1. Know where maximum strategic and realizable value is to be found in the asset portfolio 2. Establish a realistic current market value for the assets 3. Understand how to extract maximum value from the assets 4. Select the best possible intellectual property / intangible asset strategy for the situation 5. Manage the process 2 1
  2. 2. Who Cares About Maximizing IP Value? Merger and Other Stakeholders Acquisition Interests Internal Asset Managers Shareholders Partners Tax Authorities International Affiliates Auditors The Media Wall Street Analysts Finders of Fact 3 Value Maximization Alternatives Licensing Auction Sale Collateralization Securitization Competitive Disposition IP Holding Companies Joint Venture 4 2
  3. 3. Asset Groups that can be Monetized Patents Internet Assets Technology Copyright Portfolios Contracts Software/IT Licenses Trademarks Lawsuit Rights Databases 5 Identification, Bundling, and Triage From a valuation perspective, intangible assets are best viewed as an integrated bundle: Difficult to Isolate Complementary Travel in Groups 6 3
  4. 4. Bundles of Intangible Assets Marketing Bundle IT Bundle Technical Bundle Primary trademark Enterprise solutions Key patents Corporate name and logo Custom applications Trade secrets Marketing umbrella Data warehouses Formulae Sub-brand names Sub- Master licenses Packaging technology and sources Core brand Source code Shapes and sizes Worldwide trademark registration Databases Process technology Copyrights Data mining Design technology Secondary trademarks Domain names / URLs Proprietary test results Packaging design and copyrights e-Commerce sites Plant and production design Trade dress Third party software Product specifications tools Characters Credit/payment systems Operating platforms 7 Multiple Licensing Strategies Retail licensing Brand extension licensing Hybrid licensing Endorsement licensing Online licensing Co-brand licensing Ingredient licensing Cross licensing 8 4
  5. 5. Licensing Royalty Rates Royalty Rate Distribution There is no typical royalty rate. 20 The most frequent 18 16 % of agreements rate is 5% 14 39% of agreements 12 10 are for less 8 42% of agreements 6 4 are for more. 2 0 Source: RoyaltyStat.com 1% 3 5 7 9 11 13 15 > Annual Rate 9 Royalty Rates - Trademarks Corporate Brand Trademark Royalty Rates Relative to Product Type 18.0% 15.0% 12.0% 6.0- 15.0% 9.0% 4.0- 11.0% 6.0% 2.0- 7.0% 3.0% 0.5- 3.5% 0.0% Consum er Com m ercial Industrial Com m odity * Plus or minus two standard deviations from mean, all trademark licenses. 10 5
  6. 6. Effect of Parties Relationship on Trademark Royalty Rates International Corporate Brand/Trademark Royalty Rates Relative to Licensor/Licensee Relationship 12.0% 9.0% 4.0 - 11.5% 3.0 - 6.0% 9.0% 2.0 - 7.0% 1.0 - 3.0% 5.5% 0.0% Pure 3rd Party Affiliates Subsidiaries Inter-Company * Cluster analysis plus or minus two standard deviations from mean. 11 Royalty Rates - Technology Industry Range Aerospace 2.0% - 15.0% Chemical 1.0% - 10.0% Health Care Equipment 5.0% - 10.0% Electronics 3.0% - 12.0% Medical Equipment 3.0% - 5.0% Software 5.0% - 15.0% Semiconductors 1.0% - 2.0% Pharmaceuticals 5.0% - 20.0% Diagnostics 2.0% - 5.0% Source: Les Nouvelle 12 6
  7. 7. The Process of Extracting Value Timing Setting People Paper 13 Value Extraction Strategies Disposition Liquefaction Leverage 14 7
  8. 8. Disposition Auction Sale Competitive Disposition Merger & Acquisition 15 Liquefaction Collateralization Securitization IP Holding Company 16 8
  9. 9. Leverage Traditional Licensing Other Licensing Models Joint Venture 17 The Negotiating Environment Timing Relative strength Relative need Economic power The state of the market Available alternatives Guideline pricing 18 9
  10. 10. Value Maximization Case Studies Licensing IBM, Kmart Collins & Aikman, Sale Jenny Craig Collateralization Polaroid, Delphi Dunkin Brands, Securitization Gloria Vanderbilt AstroTurf, Auction Tower Records Holding Company Chiquita Brands 19 IP Valuation Traditional Valuation Methodologies • Cost • Market • Income • Relief from Royalty Alternative Valuation Techniques • Statistical Modeling (Trademarks) • Real Options Approach (Patents) • Other 20 10
  11. 11. Standards of Value Fair Market Value • The price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. (IRS-Hypothetical) (IRS- Fair Value • The amount at which an asset could be bought or sold in a current transaction between specific, willing parties, that is, other than in a forced or liquidation sale. (FASB-Specific (FASB- synergies) 21 Statistical Valuation (Trademarks) Internally generated trademark values are not reported in financial statements, but … Acquired trademarks are now valued and reported (FASB SFAS 141&142) Statistical modeling can be applied to derive a valuation formula based on these reported trademark values 22 11
  12. 12. Statistical Valuation (cont.) We have developed a model that calculates trademark values as a function of: • Annual sales the trademark supports • Context in which the trademark was acquired (e.g. liquidation or going concern) • Global/domestic scope of the trademark use • Industry where the trademarks are used 23 Statistical Valuation (cont.) Conclusions: • Given the statistical model, trademark values can now be determined under a variety of contexts (e.g. internally generated trademarks in bankruptcy) • Average liquidation value for trademarks is only 13.6% of the going concern value • Global trademarks are, on average, 10.8% more valuable (versus domestic) for the same level of sales 24 12
  13. 13. QUESTIONS AND ANSWERS 25 13

×