Intangible Assets and Intellectual Property services
Intangible Assets and Intellectual Property valuation has long been at the core of many of our clients' most important transactions and legal actions.
This is not surprising, intellectual capital is the wealth creating asset of the future. Patents, trademarks, copyright, knowledge, secrets, brands etc. are the most important advances in wealth creation. These assets are capable of separate identification.
Valuation Consulting specialises in Intangible Asset and Intellectual Property valuation and assists with their valuation and proposed exploitation by way of modeling and market comparability to advise concerning licensing structures and royalty rates.
Four principals are accredited expert witnesses in this area and are practiced in the art of testimony. Each has appeared in court as well as being involved in some of the largest intellectual property infringement actions worldwide. Litigation experience and our contentious work is summarised here in the services section.
It is important to identify the value of intangible assets and intellectual property in any deal. This study of intellectual capital reinforces the value drivers. Furthermore every business has intangible assets even if it is only in the name under which it trades. Management and institutions need to know the value of what might be the single most valuable asset in the company and business managers need to know, or should know, the value of all assets under their stewardship and control.
In today's market the ability to understand and analyse the intellectual property and intangible asset strategies of your business has never been more important. The starting place is to understand valuation and to be able to judge whether you can exploit the assets better.
It does not take a giant leap of imagination to work out that if there is such a key component of corporate value the ability to create, manage and exploit these rights to maximum effect is a required core business skill for companies both large and small.
The impact of distress on IP and it's effect is discussed briefly in our Insolvency and Recovery Services section
With most M&A deals company management is concerned with the level of intangibles recorded and resulting amortisation. For many deal makers the attempt is to maximise the amount of goodwill recorded. This strategy has been viewed as attractive but only in the short term. In view of this lack of detailed information many are therefore, instead, looking more closely at reporting transactions where a number of specific intangibles are recorded in terms of their type as well as their value to the overall deal, even if this leads to more amortisation (see next paragraph) than would have been the case (goodwill is not amortised).
It is not necessarily the case that identifying intangibles and their value to a deal means that they then have to be amortised, as long as they meet the accounting standard's requirement that they are of indefinite value to the company. A significant workflow concerns accounting for acquired intangibles under IFRS and also read our section about reporting and accounting for IP. An independent annual review is required of us, usually led by an auditors instruction. Successful IP including brands may have indefinite useful lives. The indefinite life status is reassessed annually and whenever indicators show a need. The IP is not amortised but tested for impairment. The latest about purchase cost allocation is included at our NewsDesk and the dedicated service section. These appraisals provide in addition valuable information to investors and generally helps stakeholders who often want to know what percentage of the purchase price such as, say a brand represented and continues to represent.
Assets that must be individually accounted for under IAS38 and IFRS3 can be categorised as follows:
Technology-based - Patented technology, computer software, unpatented technology, databases, trade secrets; Marketing-related - Trademarks, brands, trade names, internet domain names, non-compete agreements; Contract-based - Licensing, royalty and standstill agreements, contracts for advertising, construction, management, service or supply, lease agreements, construction permits, franchise agreements, operating and broadcasting rights, use rights such as drilling, water, air, mineral, timber cutting and route authorities, servicing contracts, employment contracts; Artistic-related - Plays, operas, ballet, books, magazines, newspapers, musical words, pictures, photographs, videos, films, television programmes; and Customer-related - Customer lists, order of production backlog, customer contracts and related relationships, non-contractual customer relationships.