The Economic Tsunami: Key Issues in IP Due Diligence


Published on

Published in: Business
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

The Economic Tsunami: Key Issues in IP Due Diligence

  1. 1. The Economic Tsunami: Key Issues in IP Due Diligence and Monetization The Value Perspective Presented by: Weston Anson CONSOR Intellectual Asset Management 858.454.9091 [email_address]
  2. 2. 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
  3. 3. Who Cares About Maximizing IP Value? Merger and Acquisition Interests Shareholders Tax Authorities Auditors Wall Street Analysts Other Stakeholders Internal Asset Managers Partners International Affiliates The Media Finders of Fact
  4. 4. When Is Valuation Necessary? Strategic assessment of whether the IP assets be sold separate from the business Negotiation of “stalking horse” bids and initial asset bundle pricing structures Evaluation of bids for global asset portfolio versus individual asset buyers IP assets to serve as collateral for various forms of financing Purchase price allocation analysis of IP-related transactions
  5. 5. Identify IP / IA Bundles for Value Stratify IP / IA Core v. Periphery Peripheral portfolios may be monetized Vertical and horizontal Out-licensing / Spin-off Analyze quality of IP Relevancy to current / future business Relative strength analysis Potential infringement assessment
  6. 6. Monetizing IP Assets Monetization Alternatives Sale / Auction License Creditor Settlement Sale & Leaseback Securitization Litigation Securitization Alternatives Line of Credit Take-out or DIP Interim Long term
  7. 7. Intangible Asset Bundles Miscellaneous Assets Research-Related Assets Product-Related Assets Other Technology Assets Data/Information-Related Assets Internet-Related Assets People-Related Assets IT/Software Patent-Related Bundles of Value Communications-Related Assets IP Contracts Other Brand-Related Assets Real-Estate Related Assets Corporate Identity Assets Trademarks
  8. 8. IP & Intangible Assets Intellectual Property PATENTS COPY RIGHTS TRADE MARKS TRADE SECRETS Intangible Assets Data & Knowledge Bases COPY RIGHTS Customer & Vendor Relations Proprietary Software Proprietary Software Internet Assets
  9. 9. Case Study Multi-Jurisdiction Bankruptcy and Sale The Americas U.S. Canada Mexico Brazil Europe Belgium Spain Sweden Czech Republic Netherlands United Kingdom Germany Italy A leading global supplier of interiors to automotive industry (70% of U.S. instrument panels), with operations in:
  10. 10. U.S. IP Issues IP not to be sold outright Need for continued use in North America Reserve right to return to Europe Non-exclusive use imperative Buyer could be competitor in U.S. and worldwide Valuation must be comprehensive Intangible assets transferred with operations greater than strictly intellectual property rights
  11. 11. IP Assets Identified Patents (74 total, 12 in current use and to be licensed) Product design features (invisible air bag door) Manufacturing process improvements (heat transfer and molding techniques) Trademarks (transitional use only) Collins & Aikman Invisitec, Akro-Edge, AcT
  12. 12. Other Intangible Assets Trade Secrets Embedded in shop-level manuals and design centers Know How Including computerized knowledge bases, and just-in-time sequential parts delivery technology Goodwill Reputation for design, materials knowledge, and manufacturing expertise and capabilities Relationships with engineering divisions of all major auto manufacturers in the world
  13. 13. U.S. Approach to Appraisal Know-How and trade secrets valued as being transferred in a bundle with patents and tangible plant assets Value marketing bundle components by plant / country based on contract activity and transitional licensing structure
  14. 14. Summary By Country
  15. 15. Result: Negotiated Sale U.S. Appraisal Total IP value in the range $37.7 — $40.8 million* USD 88% tech bundle, 12% marketing bundle Liquidation value discounted to $16.7 — $18.2 million* USD 90% tech bundle, 10% marketing bundle Negotiated Sale of IP license $19.25 million USD Approved by Court February 2006 * Values are changed by a common factor
  16. 16. Conclusions Dual venues and agendas created unique challenges and timeframes Comprehensive IP / IA due diligence identified more than 10x ordinary value extraction Proof that intangible assets, not just IP like patents and trademarks, can be monetized
  17. 17. Summary Identify all IP / IA in the current project Understand the context for historical and potential use of the assets Triage the assets by quality and priority Bundle the assets for optimal effectiveness Benchmark valuation Liquidation context End-use dependent Market the assets / close transactions Licensing Sale or other disposition