Valuation enabling accurately priced licensing model
Overview
The Rouse Consultancy team were hired by a commercial project, tied to a Swedish university, that specialises in scientific and technological improvements for positive environmental effects. Rouse was asked to value the client’s intellectual property (IP) portfolio and to evaluate the prospect of licensing the innovation, globally, to organisations with similar needs. The innovation in question was a revolutionary material that is added onto windows increasing its ability to insulate, reducing the amount of energy required for cooling down or heating an establishment in the summer and winter respectively. This smart solution improves house temperature regulation while also reducing the use of electricity.
The primary challenge for the client was to obtain an accurate valuation of their IP in order to create licensing models and thus create a new revenue stream. The valuation needed to be transparent and concise to enable the commercial project group to understand and agree the intrinsic value of the business, demonstrating a clear link between the valuation and an accurate pricing of the license agreement. This would generate confidence that the valuation would lead to acceptance on the stock market with the resulting licensing agreement attracting new global players.
Our approach
Rouse worked with the client to obtain relevant data and information to understand the concept and difficulties of this technologically advanced product. The data was then compiled into a detailed business analysis consisting of: identifying assets, categorising them into registered and unregistered IP and allocating a value to them, in order to obtain an economic valuation. The business analysis assessed the scope and strength of control each asset afforded the business as well as highlighted the opportunity for a business model that could allocate a portion of future revenues to a particular asset. Rouse valued the client business and built a control strategy to support the company, highlighting where to focus effort to build external confidence in its business.
Value created
The client received a valuation on its business, identifying the precise areas within its technology platform that significantly impact its value generation and competitive advantage, defined in an easily digestible format for shareholders and global investors on the market, accounting for both current and future revenue. Throughout the valuation process the benefits and challenges associated to the operability of each asset were thoroughly dissected and in some cases the core innovative aspect was later patented which gave the client an improved understanding of the valuation and demonstrated that the innovation could generate a profit and was worth continuing to invest in. The valuation and analysis of identified gaps in the client’s IP functions also provided the client with a focus area of where improvements needed to be made to better protect valuable innovation. The valuation also revealed the economical dimensions that could be of use to provide a foundation decision making on which future assets should be attributed to which particular licenses.
