Valuation
Valuing IPR is a complex financial process that requires specialized skill. Without it, expectations may become misguided and results disappointing. The valuation process does not just tell us the final appraised value, it also illuminates powerful points that must be negotiated in the transaction discussions. Successful negotiations with Target Transacting Parties depend upon comprehensive financial intelligence regarding the IPR, the industry in which the IPR resides and the Target Transacting Party itself.
IP Launch routinely performs valuation on multi-million dollar IPR, sometimes just a few million and sometimes tens or even hundreds of millions of dollars.
Valuations can be performed at different levels. For example, the level of valuation needed to decide whether to pursue a particular path of product development can differ from the level of valuation needed in a merger or acquisition.
Below are what we have found to be the most common events that require some level of valuation assistance. (They are not ranked in any particular order)
1. In preparation for selling the company or a particular technology in the immediate future
2. Positioning the company or a particular technology for sale at a target point in the future, say 3 - 5 years out.
3. Preparing for discussions with potential investors
4. Trying to sift many options down to the best few that most deserve your time, money and other resources.
5. Setting expectations - yours or someone else’s - regarding what something may be worth later if you take certain actions now.
6. Ownership transfer or sharing for any reason, not just a sale. Divorce, death, generational transfer, new management executives coming on board, just to name a few.
7. Significant changes in your economic environment. If the plan you are executing today was formulated during a different economic climate than the one in which you are operating, certain valuations can do far more to inspire and encourage than discourage or alarm your stakeholders.
8. Responding to a cash shortage. Most companies have more innovation than they realize and less cash than they desire. One company’s trash (unused IP) is another company’s treasure. Monetize everything. Do you have an accurate inventory of your IP? Is it accurately measured by its true potential or just its use to you? If the latter, it is like having a bank account you don’t know you own. Tap into that account.
9. Attracting third-party partners. IP, if used correctly, can be the pheromones of business, regardless of size, revenue, length of time in operation or many other typical factors. In this economy, relationships matter more than ever, in part because those relationships may provide you access to customers or specific resources you would normally have to spend money to acquire. IP can be used to attract third-parties to discussions you might not otherwise be able to start. It can bring opportunities you might otherwise consider “out of your league.” IP can potentially offer a seductive power that turns the indifferent parties into someone very focused on a relationship with you.
10. When you need to reduce risk. If you use your IP correctly, it can do for your business what cholesterol lowering medications due to reduce heart attacks. Myths and old-school ideas about IP would have us think otherwise, but in an economy built on innovation IP can be used to take measurable risk out of specific ventures, entire business investments or growth strategies. Does it remove ALL the risk? No, it is IP, not fairy dust. Cholesterol meds won’t make you live to be 200 years old either, but they may help you live a much longer and productive life. The same is true with IP. It can help you thrive when others falter.
How would you like us to help with the valuation of your business or technology? Contact Us.
See Michelle’s latest posts on this topic at InnovativeEconomy.com:
“IP Launch Offers Business Stimulus Package In Innovation Contest.”
