Valuation and Monetization of Corporate IP

Transcription

1 Valuation and Monetization of Corporate IP ICLE Intellectual Property Spring Seminar March 16, 2009 Presented by: Weston Anson CONSOR Intellectual Asset Management 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 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 3 Value Maximization Alternatives Licensing Auction Sale Collateralization Securitization Competitive Disposition IP Holding Companies Joint Venture 4 2

3 Asset Groups that can be Monetized Patents Technology Software/IT Trademarks Databases Internet Assets Copyright Portfolios Contracts Licenses Lawsuit Rights 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 Bundles of Intangible Assets Marketing umbrella Sub-brand brand names Core brand Worldwide trademark registration Copyrights Secondary trademarks Packaging design and copyrights Trade dress Characters Marketing Bundle Primary trademark Corporate name and logo Data warehouses Master licenses Source code Databases IT Bundle Enterprise solutions Custom applications Data mining Domain names / URLs e-commerce sites Third party software tools Credit/payment systems Key patents Trade secrets Formulae Technical Bundle Packaging technology and sources Shapes and sizes Process technology Design technology Proprietary test results Plant and production design Product specifications Operating platforms 7 Multiple Licensing Strategies Retail licensing Hybrid licensing Online licensing Ingredient licensing Brand extension licensing Endorsement licensing Co-brand licensing Cross licensing 8 4

5 Licensing Royalty Rates There is no typical royalty rate. The most frequent rate is 5% 39% of agreements are for less 42% of agreements are for more. Source: RoyaltyStat.com % of agreements Royalty Rate Distribution % > Annual Rate 9 Royalty Rates - Trademarks Corporate Brand Trademark Royalty Rates Relative to Product Type 18.0% 15.0% 12.0% 9.0% 6.0% 3.0% 0.0% % % % % Consumer Commercial Industrial Commodity * Plus or minus two standard deviations from mean, all trademark licenses. 10 5

6 Effect of Parties Relationship on Trademark Royalty Rates International Corporate Brand/Trademark Royalty Rates Relative to Licensor/Licensee Relationship 12.0% 9.0% 6.0% 3.0% % % % % 0.0% Pure 3rd Party Affiliates Subsidiaries Inter-Company * Cluster analysis plus or minus two standard deviations from mean. 11 Royalty Rates - Technology Aerospace Chemical Electronics Software Pharmaceuticals Diagnostics Industry Health Care Equipment Medical Equipment Semiconductors Range 2.0% % 1.0% % 5.0% % 3.0% % 3.0% - 5.0% 5.0% % 1.0% - 2.0% 5.0% % 2.0% - 5.0% Source: Les Nouvelle 12 6

7 The Process of Extracting Value Timing Setting People Paper 13 Value Extraction Strategies Disposition Liquefaction Leverage 14 7

8 Disposition Auction Sale Competitive Disposition Merger & Acquisition 15 Liquefaction Collateralization Securitization IP Holding Company 16 8

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 Value Maximization Case Studies Licensing Sale Collateralization Securitization Auction Holding Company IBM, Kmart Collins & Aikman, Jenny Craig Polaroid, Delphi Dunkin Brands, Gloria Vanderbilt AstroTurf, Tower Records 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 Fair Market Value Standards of 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) 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 Specific 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 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 QUESTIONS AND ANSWERS 25 13