Ip due diligence

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Ip due diligence

  1. 1. IP DUE DILIGENCE KEY ISSUES FOR M&A FROM A VALUE PERSPECTIVE FERNANDO TORRES, MSC IPMETRICS ®
  2. 2. TOPICS <ul><li>Public IP identification and value </li></ul><ul><li>Quality, hierarchy and value elements </li></ul><ul><li>The valuation process </li></ul><ul><li>IP value enhancement </li></ul>
  3. 3. FIRST STEPS: IDENTIFY THE INTANGIBLES <ul><li>Internally generated intangible assets or intellectual property are expensed or recorded at historical cost </li></ul><ul><li>Acquired intangibles and IP reported as allocated at purchase date </li></ul><ul><li>Intellectual property must be stratified into core and peripheral categories </li></ul><ul><li>Not all intangible assets are intellectual property </li></ul><ul><li>Not all intellectual property may be at the core </li></ul><ul><li>Peripheral portfolios may be monetized </li></ul>
  4. 4. INTELLECTUAL PROPERTY
  5. 5. INTANGIBLE ASSETS
  6. 6. IDENTIFY IP PORTFOLIOS FOR EXTENSIONS <ul><li>Vertical and horizontal </li></ul><ul><li>Out-licensing </li></ul><ul><li>Spin-off </li></ul><ul><li>Analyze quality of trademark IP </li></ul><ul><li>Relevance to current/future business </li></ul><ul><li>Relative strength analysis </li></ul><ul><li>Potential infringement analysis </li></ul>
  7. 7. ANALYZE IA/IP PORTFOLIO QUALITY <ul><li>Forward/backward references </li></ul><ul><li>Breadth of claims set </li></ul><ul><li>Challenge / infringement record </li></ul><ul><li>Trade secrets procedures and safeguards </li></ul><ul><li>Knowledge bases </li></ul><ul><li>Below-market contracts </li></ul>
  8. 8. STANDARDS OF VALUE <ul><li>Fair market value – FMV – </li></ul><ul><ul><li>The price at which property would change hands between a willing buyer and seller, when neither party is under compulsion to transact and both parties have reasonable knowledge of relevant facts </li></ul></ul><ul><ul><li>IRS purposes, hypothetical transaction </li></ul></ul><ul><li>Fair value – FASB IFRS – </li></ul><ul><ul><li>The amount at which an asset could be bought or sold in a current transaction between willing parties, other than in a forced or liquidation sale </li></ul></ul><ul><ul><li>GAAP, specific synergies </li></ul></ul>
  9. 9. VALUE OF IP IN USE <ul><li>Value to (hypothetical) licensee </li></ul><ul><li>Value to (potential) licensor </li></ul><ul><li>Anticipated growth / decline </li></ul><ul><li>Reserve value </li></ul><ul><li>Blocking value </li></ul><ul><li>Monopoly value </li></ul><ul><li>Out-licensing </li></ul><ul><ul><li>Core IP vis-à-vis Peripheral IP </li></ul></ul><ul><li>IP holding company </li></ul>
  10. 10. CONTACT US

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