WWW.DISSERTATION.XLIBX.INFO
FREE ELECTRONIC LIBRARY - Dissertations, online materials
 
<< HOME
CONTACTS



Pages:   || 2 | 3 | 4 | 5 |   ...   | 29 |

«Research commissioned by the Intellectual Property Office, and carried out by: Martin Brassell, Kelvin King This is an independent report ...»

-- [ Page 1 ] --

Banking on IP?

The role of intellectual property and intangible assets in

facilitating business finance

Final report

Research commissioned by the Intellectual Property Office, and carried out by:

Martin Brassell, Kelvin King

This is an independent report commissioned by the Intellectual Property Office (IPO). Findings and opinions are

those of the researchers, not necessarily the views of the IPO or the Government.

2013/34

© Crown copyright 2013 Intellectual Property Office is an operating name of the Patent Office Banking on IP?

Purpose Small and Medium sized Enterprises, or SMEs, are the lifeblood of the UK economy. Their ability to grow is a key determinant of the nation’s future economic health. In recent years, businesses of all sizes have been investing more in intangible assets, in particular Intellectual Property (IP), than in fixed or physical assets. This study sought to examine how effectively SMEs are able to use these assets to secure the finance they need for company growth.

ISBN: 978-1-908908-86-5 IP: an under-appreciated asset class Banking and IP?: The role of intellectual property and intangible assets in facilitating business finance Company cash flow, perhaps the chief consideration in debt finance, is often Published by The Intellectual Property Office 6th November 2013 closely connected to company IP assets. Despite this, and good evidence to show that high growth, IP-rich businesses are more resilient and perform 1 2 3 4 5 6 7 8 9 10 better than others over time, the IP and intangibles which equity investors © Crown Copyright 2013 value highly are rarely considered in mainstream lending practice. This is unsurprising: balance sheets do not represent their value, and current You may re-use this information (excluding logos) regulations actively work against consideration of IP as an asset class but the free of charge in any format or medium, under the terms of the Open Government Licence. To view result is a real and important disconnect between banking regulation and this licence, visit http

–  –  –

• improve efficiency in due diligence on IP assets

• improve practice in obtaining reasonable and effective charges over IP

• make room for development of more effective IP markets, supported by a better information infrastructure

–  –  –

In 2007 Martin founded Inngot (www.inngot.com), a Swansea-based company providing online tools to help companies identify, value and promote their IP and intangible assets. These include ‘Sollomon’, the online indicative valuation tool for IP and intangibles, using a methodology developed with specialist input from Grant Thornton UK LLP.

Inngot provides IP support and services to a variety of organisations, including SMEs, large corporates, banks, investment networks, universities and government-backed business support initiatives including the GrowthAccelerator programme.

Kelvin King Kelvin joined the Government in 1970. His early career was spent with the Government’s Share Valuation team, which is responsible for all of the private company, business, intellectual property, and intangible asset valuation requirements of Government. He left the Government after 17 years to establish a valuation unit for a large accountancy practice and, before the founding of Valuation Consulting Co (www.valuationconsultingco.com), a dedicated intangible asset IP and business valuation practice, was managing director of a specialist valuation company within two major investment banks.

Valuation Consulting has performed hundreds of valuations of IP and IP-rich businesses worldwide to support debt and equity.

Kelvin is a contributor to many journals, television and radio. He is a contributor to books (RICS Red Book, Business Valuation Digest – Thomson, Intellectual Property Rights and Their Valuation – Gresham, Due Diligence Law and Practice – Sweet & Maxwell, The Trademark Handbook, amongst others). His book Valuation and Exploitation of Intellectual Property and Intangible Assets was published by EMIS Professional Publishing in May 2003.

–  –  –

Executive Summary Small and medium-sized enterprises, or SMEs, are the lifeblood of the UK economy.

Their ability to grow is a key determinant of the nation’s future economic health. In recent years, businesses of all sizes have been investing more in intangible assets, in particular intellectual property (IP), than in fixed or physical assets. This study sought to examine how effectively SMEs are able to use these assets to secure the finance they need for company growth.

Knowledge assets aren’t appreciated in mainstream UK lending

Cash flow, perhaps the key consideration in debt finance, is often very closely connected to a company’s IP and intangibles. Despite this, and good evidence to show that high growth, IPrich businesses are more resilient and perform better than others over time, IP and intangibles are rarely considered in mainstream lending practice.

This is unsurprising. Balance sheets do not represent the value of these assets, and current regulations actively work against consideration of IP and intangibles as an asset class. The result is a real and important disconnect between banking regulation and practice and the UK’s growth ambitions.





Recent banking initiatives targeting growth businesses are finding that traditional fixed assets simply no longer exist. In the asset-based lending market, too many examples have emerged of transactions where control over IP and intangibles is recognised as being important.

IP and intangibles are, in effect, unbankable. Change seems inevitable. How can it be accelerated?

Other countries are already beginning to make change happen… There are plenty of examples of faster growing economies taking steps to understand this issue and make knowledge assets bankable. Malaysia and Singapore are introducing guarantees to facilitate IP-backed lending; Denmark and India are supporting the development of IP marketplaces; Germany has sought to articulate the ‘Wissensbilanz’ to assist financial analysis of individual firms; Brazilian banks are experimenting with IP audits prior to lending.

China has publicly set out its policies to make the country a world leader in technology by 2050 which has included the establishment of targets for the creation of “indigenous IPR”, while neighbouring Hong Kong set up an Innovation and Technology Fund targeting IP-rich businesses with a $5bn injection as long ago as 1999.

… and in the UK, some funders are already making the IP link IP and intangibles represent part of the ‘skin in the game’ for SME owners and managers, who have often expended significant time and money on their creation, development and protection.

14 The role of intellectual property and intangible assets in facilitating business finance When equity investors (from business angels to venture capital companies) assess the quality and attractiveness of investment opportunities, they invariably include consideration of the underlying IP. They want to understand the extent to which it represents a barrier to entry, creates freedom to operate, and meets a real market need.

Certain types of lending such as venture debt and pension-led funding (which directly harnesses IP assets) already involve close scrutiny of the whole asset portfolio. So why are other routes to finance reluctant to look at IP and intangibles?

–  –  –

Whilst there are improvements needed to the practicalities (but not the rules) of registration, the basic step that is missing is a clear inventory of the IP and intangibles, without which a lender can never be certain that the assets which should be present are in fact to hand.

–  –  –

There is an underlying structural issue relating to value realisation in a distress situation, caused by the absence of mature marketplaces in which IP assets can be sold in the event of default.

However, this cannot mean that the IP assets of a company in distress are of no value. Rather, there is not yet the same tradition of disposal, or the same volume of transaction data, as that which has historically existed with tangible fixed assets.

The concern over value is partly intrinsic (because IP is unique rather than a commodity), and arises partly because of an assumption that if a company has failed, its IP was no good. This is a non-sequitur, since equity investors have plenty of ‘war stories’ that illustrate great IP failing due to management failings or chronic under-funding (which they sometimes attribute to a lack of bank support).

Global licensing activity leaves no doubt that IP is in fact an immensely valuable, highly tradable and very portable asset class. In individual cases, insolvency practitioners have no difficulty illustrating cases where IP has been central to recovery in a downside (distressed) situation.

Current practice simply reflects the fact that the markets to reach potential buyers of IP are immature.

–  –  –

imperfections, trading is less transparent, and demand never gets properly tested. This can, and must, change.

IP is a missed opportunity One of the most unhelpful aspects of the IP financing debate is the tendency to conflate the terms ‘technology’ and ‘IP’. There are millions of intangible business assets whose value is either not being leveraged at all, or only being leveraged inadvertently. Whilst it is true that technology and knowledge-based companies will own important IP, there are many thousands of UK businesses with IP (registered and unregistered) who would not think of themselves as being in the technology space, including many of the UK’s globally recognised creative brands and manufacturers.

The new data sources studied for this report demonstrate that while registered rights ownership among micro enterprises is generally low (in itself not a surprise), small and medium-sized businesses have much more IP to offer. Furthermore, IP audit data makes it clear that IP is under-registered (where registration is possible) and confirms the existence of many nonregistrable but value-additive assets – some covered by copyright, others not.

It is important to note that IP is not only the currency of the knowledge economy, as has often been observed, but also underpins the value of ‘old’ economy companies too. The more widely business is transacted with it, and the more visible it becomes in public accounts, the easier its value becomes to realise. This will lead to greater opportunities for lenders – and higher risks of inaction.

How will change be encouraged?

This study has interviewed finance professionals across a wide range of different sectors and disciplines. Whilst not all have provided their views ‘on the record’, most recognise and acknowledge that credit decisioning and account management can both benefit from better information on, and understanding of, IP and intangibles, even if regulations do not currently facilitate or encourage their actual business value to be harnessed independently for security purposes. A few have initiatives already under way which seek to address this particular aspect of ‘information asymmetry’.

What is clear, however, is that while specialist funds and some asset-based financiers may be able to generate sufficient margins for detailed due diligence, mainstream lending needs costeffective, standardised approaches in order to capture and process information on IP and intangibles (which is not currently being presented by SMEs). It also requires assistance to facilitate effective controls to be taken over the assets.

Initial activities may be best focused on cases where traditional security is known to be insufficient or unavailable. In these instances, it is important for a lender to capture as much as possible in its security envelope, since it does not have the comfort of ‘conventional’ assets as a fall-back.

Unsecured lending in general, and applications to the Enterprise Finance Guarantee (EFG) scheme in particular, are places for banks to start gathering experience in dealing with IP and intangible assets – in the case of EFG, they can do so with a ‘safety net’.

16 The role of intellectual property and intangible assets in facilitating business finance

–  –  –

The issues identified in this report represent a particular challenge for the development of the knowledge economy, but also place potentially serious constraints on the growth of companies

in traditional industries. There are two overarching recommendations of this report:

–  –  –

It is important to emphasise that this report does not advocate changes to the legislative framework, to policy priorities, or to accounting standards. The steps required to unlock the business value of IP are pragmatic measures that build on principles and practices which exist today. However, the recommendations, set out in more detail within Chapter 10 of the report (Conclusions), will need to be embraced by the market as a whole in order to achieve their

transformative potential. They are as follows:

–  –  –

Due diligence guidelines can help to control costs. Checks will be needed in order to 3.

create confidence that the ownership and quality of the IP and intangibles are understood, that they contribute to serviceability and cash flow (particularly in the case of debt finance), and that their maturity is in line with what it would be reasonable to expect, given the development stage of the business. This will require templates, training and/or access to professional advice, at a cost that lending margins can support, within a turnaround time that meets business requirements.

More effective charges should be part of the lending package. Once knowledge assets 4.

are captured and verified, it becomes possible to create a proper interest over them. Legal templates and the resource toolkit will help lenders to achieve this at modest cost, firstly by providing appropriate wording for the instruments, and secondly by providing guidance on the procedures which must be followed when recording them.



Pages:   || 2 | 3 | 4 | 5 |   ...   | 29 |


Similar works:

«Caribbean cuisine on a Branson budget Telegraph 09-11-04 2:22 PM W Jobs Dating Games Offers Caribbean cuisine on a Branson budget When invited by a millionaire to jet between islands, sampling food and wine created by world experts to raise money for charity, how could anyone refuse? Robert Joseph gets his fill of fine Caribbean dining. By Robert Joseph Published: 10:19AM GMT 03 Nov 2009 Serious wine tastings aren't supposed to be like this. Usually, when a top winemaker such as Wilhelm Haag,...»

«Chinese Migration into Primorskii Krai: Economic Effects and Interethnic Hostility Mikhail Alexseev I prefer this land to be a Russian desert rather than a Chinese oasis. Against our will, we resorted to employing Chinese labor, because it was very cheap, because the workers were sober, and because they had almost no holidays. Pavel F. Untenberger, Governor General of Primorskii Oblast, 1888-18981 Since gaining sovereign power over the territories extending along the Amur River to the Pacific...»

«Haiti Earthquake PDNA: Assessment of damage, losses, general and sectoral needs Annex to the Action Plan for National Recovery and Development of Haiti Haiti PDNA 2010 Foreword We are pleased to present you with the results of the post-disaster needs assessment conducted in Haiti from February 18 to March 24 2010, at the request of and under the direction of the Government of the Republic of Haiti, with the technical support of the UN, the IDB, the ECLAC, the World Bank and the European...»

«Financial services sector report Opportunities for Standards in Investment and Asset Management A joint study from BSI and Long Finance – 2014 Prepared by Z/Yen Group for BSI Opportunities for Standards in Investment and Asset Management About the Publishers BSI (British Standards Institution) is the business standards company that equips businesses with the necessary solutions to turn standards of best practice into habits of excellence. Formed in 1901, BSI was the world’s first National...»

«The Post-Foreclosure Experience of U.S. Households in the Current Housing Market Downturn Raven Molloy and Hui Shan Federal Reserve Board of Governors1 Abstract The flood of foreclosures on residential mortgages in the past several years has had a significant impact on household finances, housing markets, and financial markets. To date, however, little is known about what happens to the borrower’s household after their mortgage has been foreclosed. In this paper, we study the post-foreclosure...»

«SUPPLEMENT DATED 26 APRIL 2011 Allied Irish Banks, p.l.c. (a company incorporated with limited liability in Ireland) €15,000,000,000 Euro Medium Term Note Programme Guaranteed by the Minister for Finance of Ireland This supplement (the “Supplement”) to the Exempt Offering Memorandum dated 21 January 2010 as supplemented by the Supplements dated 8 April 2010 and 24 January 2011 (the “Exempt Offering Memorandum”) is issued for the purpose of giving information with regard to the issue...»

«The Implication of Economic Partnership Agreement for Africa, Caribbean and Pacific groups: A General Equilibrium Analysis Alemnesh Angelo Adamu Master’s thesis · 30 hec · Advanced level European Erasmus Mundus Masters Program: Agricultural, Food and Environmental Policy Analysis (AFEPA) Degree thesis No 826 · ISSN 1401-4084 Uppsala 2013 The Implication of Economic Partnership Agreement for Africa, Caribbean and Pacific Groups – General Equilibrium Analysis Alemnesh Angelo Adamu...»

«THE VALUE OF SPIRITUALITY WITHIN THE WORKPLACE: A DISCUSSION AND PROPOSAL FOR RESEARCH Maureen L. Mackenzie Associate Professor of Management and Leadership Townsend School of Business, Dowling College, Oakdale, NY 11777 mackenzm@dowling.edu Gilles Servant Graduate Student Laval University, Quebec City, Canada ServantGilles@yahoo.ca ABSTRACT This paper considers the definitions of workplace spirituality, its value, and how the defining foundational concepts are manifested within organizations...»

«6 Global TrusT and EThics in FinancE Innovative Ideas from the Robin Cosgrove Prize Carol Cosgrove-Sacks / Paul H. Dembinski Editors Trust and Ethics in Finance Innovative ideas from the Robin Cosgrove Prize Trust and Ethics in Finance Innovative ideas from the Robin Cosgrove Prize Editors Carol Cosgrove-Sacks / Paul H. Dembinski Globethics.net Global 6 Globethics.net Global Series editor: Christoph Stückelberger. Founder and Executive Director of Globethics.net and Professor of Ethics,...»

«CLINICAL POLICY MINIMALLY INVASIVE PROCEDURES FOR GASTROESOPHAGEAL REFLUX DISEASE (GERD) Policy Number: SURGERY 025.21 T2 Effective Date: November 1, 2015 Table of Contents Page Related Policy: Bariatric Surgery APPLICABLE LINES OF BUSINESS/PRODUCTS. 1 BENEFIT CONSIDERATIONS. NON-COVERAGE RATIONALE. 2 APPLICABLE CODES DESCRIPTION OF SERVICES. 3 CLINICAL EVIDENCE U.S. FOOD AND DRUG ADMINISTRATION. 13 REFERENCES POLICY HISTORY/REVISION INFORMATION. 18 The services described in Oxford policies are...»

«Los Angeles County Office of Education Fiscal Review of the Acton-Agua Dulce Unified School District September 10, 2014 Joel D. Montero Chief Executive Officer Fiscal crisis & ManageMent assistance teaM September 10, 2014 Arturo Delgado, Ed.D., Superintendent Los Angeles County Office of Education 9300 Imperial Highway Downey, CA 90242 Dear Superintendent Delgado: In May 2014, the Los Angeles County Office of Education (LACOE) and the Fiscal Crisis and Management Assistance Team (FCMAT) entered...»

«Activity Report 2014 INDEX Foreword – EPIC President 3 Introduction – EPIC Director General 3 I. EPIC – Advocacy I. EPIC advocacy initiatives 4 II. EPIC presence at EU events 6 III. Promoting education and training 7 II. EPIC – External Communications and Publications I. EPIC shares market and technology reports 8 II. EPIC organizes technology workshops 8 III. EPIC in the media 11 IV. EPIC members in the media 11 III. EPIC – Central Role in the Photonics Community I. EPIC venture and...»





 
<<  HOME   |    CONTACTS
2016 www.dissertation.xlibx.info - Dissertations, online materials

Materials of this site are available for review, all rights belong to their respective owners.
If you do not agree with the fact that your material is placed on this site, please, email us, we will within 1-2 business days delete him.