Business Valuation Services

Intellectual Property Valuation - How Much is IP Worth?

From Fortune 500 firms to early-stage start-ups, successful executives, entrepreneurs, and companies rely on innovation to drive profits. That innovation has value as intellectual property (IP).

Cendrowski Corporate Advisors valuation specialists help organizations measure and optimize the real value of intangible assets and intellectual property. This process is worthwhile as it gives businesses the tools they need to manage and leverage trade secrets, patents and trademarks, as well as structures and processes unique to their operations.

Our founders aren’t simply valuation strategists; they are entrepreneurs who have helped create IP in startups. This experience means the Cendrowski Corporate Advisors team has the know-how to measure and optimize the real value of the intangible assets and IP that drive a company’s success. We build long-term relationships with our clients to ensure an active and informed approach to managing their intellectual assets, from valuing their IP portfolio to planning effectively for commercialization and growth.

Our IP valuation professionals are frequently engaged to valuate intellectual property assets for financial reporting processes, including evaluating the value of naming rights and measuring the impairment of intangible assets for depreciation purposes.

Reasons to Value Intellectual Property Assets

Transaction: A valuation of the IP portfolio is an essential component in determining the organization’s value to support a business sale (purchase price), new partnership (amount of contributed capital), or other equity events.

Financing: Patents, trademarks, and copyrights are assets that may be used as collateral to support a financing event. A valuation is typically required to support the transaction amount and terms.

Tax Planning and Compliance: Many tax planning and compliance situations require the valuation of intellectual property assets, from relatively simple to complex. For example, intellectual property valuations help determine the allocation of the purchase price during a taxable business combination and quantify the amount of amortization deduction for a purchased IP asset.

Financial Reporting: In a business combination event, identifiable IP assets are recorded at their current fair value; a valuation of each asset is used to determine this amount. In certain instances, an annual valuation is required to determine any asset impairment that would require a write-down of that asset.

Corporate and Litigation: Public companies require IP valuations to support financial statement preparation and presentation. In litigation, the valuation of an IP asset, and any related impairment to that asset, are critical to the determination of damages in the matter.

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Client Success: Verification of Compliance for Unauthorized Seller

Cendrowski Corporate Advisors assisted in determining compensatory damages for a greeting card company that identified products being sold on the internet that included their copyrighted images. The company engaged our team to determine if the seller was compliant with the cease and desist letter, and to determine the source of the unauthorized products. Under the terms of the letter, the seller was ordered to immediately discontinue sales of the product and destroy any remaining stock that displayed the unauthorized images.

To ensure compliance, members of the Cendrowski Corporate Advisors team visited the seller’s warehouse in Florida and asked for purchase and inventory records. Notably, while the inventory and purchase records reflected no new purchases, the inventory records showed a slow, constant reduction since the cease and desist order. We discovered that the seller was depleting his inventory through sales rather than immediately destroying the remaining stock. We reviewed our findings with counsel, and we moved for disgorgement of the sales proceeds and further sanctions against the seller.

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At the 2021 Smart Business Dealmaker’s Conference in Chicago, John Alfonsi moderated a discussion titled, “The Complexity of Pre-Sale Estate and Wealth Planning.” Participants on the panel include Pitcairn’s Andy Busser and Mark Petrosky of DP+. “You’ve decided to sell your company, you’ve grown this baby, you’ve nurtured it, now’s the time to sell,” said […]

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