Monetizing IP: Issues to Consider before Entering a Structure Finance Deal

On the Intellectual Property Expert Group (IPEG) blog we found a checklist worth saving.  It addresses the questions that need answering and items to research when evaluating the suitability of an organization for an IP structured finance deal, and it  should have universal appeal.

  • Estimate the expected annual revenues from licensing and other contractual arrangements, and determine what historical revenue numbers are available to support these future projections
  • Identify the term over which these revenues are expected to be received, and whether they will diminish or increase over time
  • Develop a pro forma schedule showing these projected revenues over the expected term of receipt.
  • Identify the sources (licensees or other obligors) responsible for these revenues, and show how the revenues shown on the pro forma are allocated among these various sources
  • Develop a brief summary of the licenses or other contractual arrangements under which these revenues are payable, including the obligations and terms for each. Research true ownership of the IP rights.
  • Identify the business need a structured finance deal
  • Determine the client company’s rated debt outstanding, and research the particulars of the outstanding debt
  • Determine the company's current borrowing cost
  • Finally, thoughly research and review the IP of the company, including a review of competitors’ IP