VIP Podcast, Episode 1: Unpacking intangible asset valuation & finance with Martin Brassell

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Episode overview

Martin Brassell from Inngott discusses the valuation of intangible assets and the challenges of accounting for them on balance sheets.

He explains that intangible assets are not universally recognized on balance sheets and discusses the lack of visibility and the need for accounting standards to address this issue.

Martin also explains the process of valuing intangible assets, considering factors such as purpose, separability, and saleability. He discusses different approaches to IP valuation and lending in different countries, including government intervention in Asia and collateral protection insurance in the US.

The conversation explores the role of intellectual property (IP) in lending and financing, specifically in the banking industry. It discusses the challenges banks face in recognizing the recoverable value of IP and the potential advantages of insuring IP assets.

The conversation also highlights the positive correlation between high growth and IP, as well as the lower propensity to default for businesses with IP. The conversation delves into the valuation process for IP and the tools and services available to assess the value of intangible assets. It concludes by discussing the lending propositions of HSBC and NatWest and their approaches to using IP as collateral.

Takeaways

• Intangible assets are not universally recognized on balance sheets, leading to a lack of visibility and challenges in accounting for their value.
• Valuing intangible assets involves considering factors such as purpose, separability, and saleability.
• Different countries have different approaches to IP valuation and lending, with government intervention in Asia and the development of collateral protection insurance in the US.
• Collateral protection insurance can provide lenders with a fallback option in case of unrecoverable default against intellectual property assets. Banks face challenges in recognizing the recoverable value of intellectual property (IP) due to lack of experience and track record in lending against it.
• Insurance can provide capital relief and drive down transaction costs for banks lending against IP assets.
• There is a strong positive correlation between high growth and the presence of IP, with businesses having patents and trademarks experiencing higher average growth rates.
• Businesses with IP are less likely to fail, making them attractive to investors and lenders.
• Valuing IP involves assessing financial inputs, projections, and risk weighting, with professional judgment and scepticism playing a role.
• Tools like GoldScene and Solomon help profile and value intangible assets, providing a clear baseline and quantitative valuation.
• HSBC and NatWest offer lending propositions that leverage IP as a means of quantifying value and providing security, with NatWest offering lower loan values and a one-year capital repayment holiday.
• Monitoring IP value and threats is important for lenders, and ongoing valuation can inform potential increases in lending.
• The UK is at the forefront of using IP as collateral in lending, with HSBC and NatWest leading the way.

Chapters

00:00 Introduction to the VIP Podcast and Guest Martin Brassell

02:15 The Challenges of Accounting for Intangible Assets

06:29 Valuing Intangible Assets: Purpose, Separability, and Saleability

14:58 The Process of Valuing Intangible Assets and Avoiding Fire Sales

18:08 Different Approaches to IP Valuation and Lending in Different Countries

23:21 Collateral Protection Insurance: A Fallback Option for Lenders

27:07 Recognizing the Recoverable Value of Intellectual Property in Banking

27:34 The Potential Advantages of Insuring Intellectual Property Assets

29:23 The Positive Correlation Between High Growth and Intellectual Property

30:47 Valuing Intellectual Property and Its Impact on Lending

32:37 The Role of Intellectual Property in Different Sectors

34:23 The Value of Copyrighted Software and Apps

36:15 The Valuation Process for Intellectual Property

37:45 Tools and Services for Assessing the Value of Intangible Assets

45:21 HSBC's Lending Proposition: Leveraging Intellectual Property as a Means of Quantifying Value

48:12 NatWest's Lending Proposition: Using Intellectual Property as Collateral for Lower Loan Values

50:26 The Importance of Monitoring Intellectual Property Value and Threats

52:55 The UK's Leadership in Using Intellectual Property as Collateral in Lending

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Virtuoso Legal is a team of intellectual property specialists based in Leeds and London - operating worldwide. Virtuoso Legal's team of IP experts have successfully tried cases in the IPEC, High Court, Court of Appeals and United Kingdom Supreme Court. In addition, the team assist companies in creating, commercialising and protecting the big ideas that make their business unique. The firm and its professionals are ranked yearly in legal directories such as the Legal 500 and Chambers and Partners, cementing their status as a Top 2% law firm in the world.

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