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IP Advantage

Unlock hidden value

We operate in an intangible economy, where net tangible assets represent only 5% of Nasdaq value and 37% of ASX value.

Technology, brands and data have become dominant value drivers. These ‘IP assets’ are pivotal to competitive advantage and have massive upside potential, but they are extremely complex and can be vulnerable. Value misjudgements can result in squandered opportunities, impairments and erosion of market share.The days of tech, data and brands being the domain of specific sectors are over. This is reflected in business terminology: agritech, biotech, fintech, fueltech, infratech, miningtech, nanotech and proptech (to name a few). Across industries, IP assets are used as both disruptive weapons and shields to protect competitive advantage.

Effective M&A, strategy, tax planning and risk management require visibility of the strength and value of IP assets. Yet most companies have poor governance systems for tech, data and brand assets. Deloitte’s IP Advantage capability specialises is quantifying, managing and monetising IP assets. Specialist rating and valuation tools provide 360˚ visibility of the economics of tech, brands and data assets - supporting defensible and insightful valuations and advice that optimises asset value and enterprise value.

Tech valuations & value optimisation

Complexity of tech valuations

Despite the opportunities and risks posed by innovative technology, many companies and investors struggle to gauge the economic potential of tech assets, because tech valuations require an integrated understanding of:

  • tech utility and differentiation
  • protection provided by patents, designs, trade secrets and copyright
  • dynamics of the target market
  • the resulting financial benefits

Deloitte's IP Advantage team has the capabilities to assess the functional, legal and economic characteristics of tech assets, and integrate the findings in robust valuations and asset management tools

Robust and insightful tech valuations and tech ratings

Our valuations are informed by the Deloitte Tech Rating, which gauges an asset's earnings potential and risk profile. Ratings are based on an assessment of over 40 sub-measures, the inputs to which include patent analytics, tech benchmarks, royalty analysis, market research and financial data.

The resulting 360˚ tech evaluations provides the building blocks for:

  • M&A planning
  • financial reporting
  • tax compliance
  • fund raising
  • litigation
  • value optimisation

Optimising tech value

Deloitte's IP Advantage tools provide a quantitative lens for the development of strategies that optimise tech value through effective monetisation and risk management.

Applications include:

  • assessing alternative monetisation strategies
  • patent portfolio management
  • R&D budget setting and allocation
  • performance tracking
IP structuring, licensing & royalty determination

IP structuring

Traditionally, companies have devoted much more attention to managing tangible assets than IP. This often results in cluttered IP portfolios with disparate ownership and management structures. At the other end of the spectrum, some companies have specialist subsidiaries with full responsibility for capturing, protecting and monetising IP. There is no universal 'best' structure, however, depending on your commercial circumstances, the value implications of alternatives can be significant.

Deloitte has the integrated IP, commercial and tax capabilities to develop value optimising IP ownership and management structures.

IP licensing and royalty determination

By extending IP into new applications and regions, effective licensing strategies generate incremental earnings with little investment. However, successful licensing programs require robust IP governance, targeted licensee selection, well-balanced contracts and appropriate royalty pricing.

Deloitte provides the following licensing services:

  • Quantification of the strength and licensing potential of IP portfolios
  • Scenario valuations to evaluate the attractiveness of alternative monetisation strategies
  • Scans of IP and licensing landscapes to prioritises target markets and licensees
  • Determination of appropriate upfront fees, milestone payments and ongoing royalty mechanisms
  • Preparation of information memorandums that articulate the strength of the licensed IP

For licensees, we appraise the reasonableness of proposed royalty mechanisms and licensing terms.

The IP Advantage team's in-depth understanding of the IP landscape and IP economics supports robust royalty opinions for litigation and transfer pricing.

IP in joint ventures

IP is often co-created through joint ventures and other forms of collaboration. We help clients ensure that co-developed IP is identified, captured and monetised.

Read an extract from: International Licensing and Technology Transfer: Practice and the Law, edited by Adam Liberman, Peter Chrocziel, Russell E. Levine, published by Wolters Kluwer. With permission from Wolters Kluwer.

Brand valuations & value optimisation

Despite the economic contribution of brands, most organisations are unable to track the brand value added by – or at risk from – corporate actions. The absence of value-based brand metrics compromises brand strategy, risk management and enterprise value.

Informed brand valuations should incorporate analysis of:

  • the impact of brand equity and customer experience on buyer behaviour
  • brand equity attributes and trends relative to competitors
  • the extent to which brand differentiation is protected by trade marks, copyright, designs and common law rights

Robust and insightful brand valuations and ratings

Deloitte uses a Brand Rating process to gauge the earnings potential and risk profile of brands through an integrated assessment of brand equity, brand performance and legal protection.

Our brand valuations not only provide an understanding of current brand value, but also a better line-of-sight between company actions, stakeholder attitudes, market performance and earnings.

The resulting 360˚brand evaluations support:

  • financial reporting
  • tax compliance
  • fund raising
  • litigation
  • value optimisation

Optimising brand asset value

Our brand evaluations not only provide an understanding of current brand value, but also the likely value impact of alternative strategies and company actions.

Deloitte's brand value optimisation services combine scenario valuations, ratings and dashboard to help clients:

  • evaluate brand architecture
  • evaluate customer experience
  • compare the value impact of strategic options
  • track brand performance
  • assess the return on brand investment
Valuation of early stage businesses

The speed of development in technology, and changes in consumer behaviour in a digital economy, are having a fundamental impact on competitive landscapes. In turn, this has increased the focus of corporate M&A and private investment on early stage companies that are potential disrupters.

Some valuation metrics are not relevant to early stage entities or can be misleading if applied crudely. Discounted cash flow valuations can be insightful, but can be misleading without a clear understanding of the risks associated with tech development and commercialisation, together with the financial impact of tech differentiation.

Deloitte uses value mapping to gauge the relative contribution of an organisation's intangible assets to driving demand and efficiencies. We then use rating tools to gauge the commercial strength of tech, data and brand assets. The resulting insights provide the building blocks for informed valuation opinions and scenario analysis.

Whether you are buying or selling an early stage business, or wanting to gauge the likely value impact of alternative strategies, contact the IP Advantage team at Deloitte.

Data valuations & value optimisation

Databases can generate value through improved product design, more relevant marketing or operational efficiency. The resulting demand and cost benefits can generate substantial value, but the mere existence of data does not imply a valuable asset.

To inform database valuations, and advise clients on strategies to optimise value, Deloitte gauges the commercial utility of data through a rating process that assesses factors such as:

  • length of data period and frequency of data points
  • breadth of data
  • database quality
  • uniqueness and replication complexity
  • recency and economic life
  • data protection
  • legal restriction on data use

Deloitte's data rating and valuation tools are used for:

  • financial reporting
  • tax compliance
  • litigation
  • value optimisation, including the evaluation of data strategy and monetisation options
IP asset governance

There are two compelling reasons for IP assets to be on the board agenda:

  • tech, brand and data assets are core assets of most organisations in a variety of industries
  • directors' duties of care and diligence do not distinguish between asset categoriesDespite this, many boards receive few meaningful IP metrics.

If a third incentive for IP asset governance is required: there are a growing number of IP related class actions in the US.

Deloitte carries out stress tests of IP asset governance to help boards assess the adequacy of their procedures regarding:

  • alignment of IP asset strategy with corporate strategy
  • the creation and capture of differentiating
  • protection and risk management of tech, brand and data assets
  • IP transactions and IP centric M&A
  • management and board reporting - tech, data and brand metrics

Where existing systems are inadequate, we development and implement governance frameworks.

Further discussion is provided in an article published in the AICD's Company Director magazine: Why IP reporting and protection should be on your board agenda