Summary
A UK-based biotech firm, which had generated initial pre-commercialisation revenue, developed some innovative technologies not yet market-ready. An IP valuation confirmed that the company had significant value tied to its patent-backed innovations. This prompted Management to consider selling surplus IP, which would release much needed funding for their core operations. By leveraging the value of its IP portfolio, this struggling business improved its financial position amid distress.
Formal intellectual property (IP) such as patents, copyrights, trademarks, and trade secrets are often overlooked by business owners. When companies fail to claim R&D tax credits, their assets are often undervalued. This can lead to poor strategic decision-making. For businesses facing cash-flow issues or market uncertainty, an IP valuation can help management recognise hidden value and unlock new capital.
Study
Facing financial pressure, a biotech business utilised its intangible asset portfolio to improve their financial position. With significant investment in R&D, the business had built a strong IP portfolio but remained twelve months away from generating sustainable revenues. To bolster its market value and protect any future competitive edge, the business pursued an IP valuation of the technology. This valuation focused on the technology they were developing for a partner who had clear customer demand.
Although the technology wasn’t fully tested with the partner’s customers, the valuation revealed substantial value. Realising this, management recognised that it was essential to safeguard these assets from exploitation or theft. Until this point, they had overlooked the market potential of their IP and had not claimed available R&D tax credits. The uncertainty around full commercialisation had also created hesitation. Encouraged by the valuation and interest from potential buyers, they began exploring offers.
Outcome
Having already substantially invested in the new tech, the management team decided that further investment of time and capital carried too much uncertainty. Therefore, the firm decided to strategically sell some of its IP assets to a partner and so raised enough funding to sustain its core operations. Selling the IP to a partner who was more comfortable with the risk allowed the business to continue trading without the distraction of trying to fully fund the commercialisation of the IP.
An IP Valuation can help unlock immediate capital and alleviate financial difficulty.
For companies under financial pressure, securing an IP valuation can provide effective solutions such as:
- Providing clarity to leadership and aid strategic decision-making.
- Unlocking quick cash-flow: Monetising IP assets through sales or licensing deals or simply securing additional funding from existing lenders.
- Accelerating M&A opportunities: Leveraging hitherto hidden IP value to attract buyers or strategic partners, even in financial difficulty.
