Our century is the century of intangible wealth. 84% of the value of S&P500 companies is based on intellecutal property and other intangible assets. That is, at least twenty trillion US Dollars of the total market cap of the S&P500 depends on intangible wealth. Compare this to the meagre sixteen percent of corporate value that is based on tangibles, and it becomes obvious that intellectual property is an ecomic asset.
At OxFirst we have developed the toolkits that allow to come to grips with IP assets. The OxFirst IP valuations offer means to extract maximum value from intellectual property. As such, they offer insights on how corporate wealth can relate to IP generation.
High growth corporations are driven by know-how, patents, copyright, trademarks and other intangibles. It is not enough to look at such assets from a mere legal perspective. What is needed is an economic perspective that allows to systematically align intellectual property with business reasoning. This is why at OxFirst we speak of IP assets rather than IP rights.
Yet, not every IP is a superstar. In fact, scientific research suggests that only a small fraction of patents are valuable. As to trademarks, it is also not every brand that is worth hundred of millions. valuable. The same holds for copyright, data rights or trade secrets. The art is to separate the wheath from the chaff.
An IP valuation can support strategic corporate decisions. It allows to associate legal rights with a dollar value. As such, it offers insights into the business dynamics surrounding IP. By systematically establishing a relationship between market performance and various forms of intellectual property rights it can become possible to get a grasp of the complex dynamics surrounding IP. Through the means of an IP valuation opportunities can become visible, whereas risks can become more manageable. This can allow to unleash untapped opportunities.
Says Dr Roya Ghafele, Managing Director of OxFirst, „It is somewhat a paradox that precisely those resources that make or break business success are so poorly understood. We still rely on lawyers to comprehend the dynamics of IP. IP drives by and large the market cap of the S&P 500. As such, it is quint essential to understand its value. It is OxFirst’s mission to change that. The IP valuations we have undertaken have been instrumental to help firms commercialize their IP.“
Elements of an IP Valuation
An IP valuation is undertaken in several stages. First OxFirst maps IP against business performance. Then the IP valuation associates these with the technical and legal features of the IP. Once the dynamics prevailing between business, the law and technology have been analysed, it can become possible to assess IP against its wealth generating ability. Often, several different econometric approaches are employed to assess the value of IP. One can for example compare how IP performs against the market. One can also assess how IP relates to cash flow. It can also be interesting to see how various forms of IP relate to each other. Each of the economic methods allows to gain different insights on IP value. Such multifacetted images can then give way to a rich picture of the economic worth of IP.
Using IP Valuation for Corporate Performance
The independent testimonials OxFirst undertakes can be used for various purposes. They can help senior management in taking corporate decisions. They can also help associate costs with potential benefits and enhance the management of IP. Other use purposes consist of licensing or selling IP. Both, the in and the out-licensing of IP depends on a good understanding of the economic contribution of IP. In all of these use cases a solid economic understanding is important. This has been OxFirst’s contribution. It is hence no exaggeration to state that OxFirst has continuously helped companies, be they large or small, to capitalize on their intellectual property.
Get in touch with us, so we also help you tap into your intangible wealth.
OxFirst launched nearly ten years as a result of research undertaken within the University of Oxford. Since then it has won multiple awards for its contribution to the valuation of IP. Flagship projects include the launch of the first national IP strategy of Austria, the securing of IP based financing for high tech ventures, the brokerage of IP portfolios and continuous successful support for entrepreneurs and their technologies.
A good example is OxFirst‘s contribution to an international acquisition of a patent portfolio. OxFirst’s IP valuation formed the cornerstone of this successful transaction. OxFirst quantifyed the value of the patents subject to the commercial transaction. The deal volume was substantial. The sell side was a corporation under pressure to divest its patent portfolio. The buy side was a private equity firm looking for arbitrage opportunities. The deal was structured by a major law firm. OxFirst’s contributon consisted of undertaking an independent assessment of the patents subject to the transaction and to support the parties in coming to terms on a price.
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