IP value is finally a boardroom discussion

IP value is finally finding its way onto boardroom agenda items, though perhaps not as much through discussion of opportunities as through mitigation of risk.

A new Innography white paper identifies six IP-related risk categories that should concern today’s companies.

  1. There is a large M&A Risk for acquirers (infringement , inaccurate valuation of IP assets during the due diligence process, lingering litigation);
  2. IP Value Wire has written often about the sometimes crippling costs that attach to IP- associated Legal Risk;
  3. It is important to know the validity of IP claims, including proof of ownership, made by potential Partners or Licensors;
  4. A company’s R&D program inherently carries with it Technology (R&D) Risk, “including the loss of competitive position, technology obsolescence and barriers to enter new markets;”
  5. Competitors can severely limit market access in a given segment by wielding a heavy IP hammer; and
  6. Today, the threat of “game-changing innovations” is a very real Market Risk.
In BVR’s new Benchmarking Identifiable Intangibles and Their Useful Lives in Business Combinations study, intangible property was found to be 72% of acquired companies’ total assets in the 360 purchase price allocations reviewed in early 2012. It is the dominant asset class in business. The above list of risk factors serves as a good checklist for discussions with management as valuators of IP enter into due diligence.