{"id":217,"date":"2011-01-18T14:31:33","date_gmt":"2011-01-18T21:31:33","guid":{"rendered":"http:\/\/ipmetrics.net\/blog\/?p=217"},"modified":"2011-01-18T14:31:33","modified_gmt":"2011-01-18T21:31:33","slug":"leveraging-ip-via-the-capital-markets","status":"publish","type":"post","link":"http:\/\/www.ipmetrics.net\/blog\/ia\/leveraging-ip-via-the-capital-markets\/","title":{"rendered":"Leveraging IP via the Capital Markets"},"content":{"rendered":"<p><em>By: David Drews, CLP<\/em><\/p>\n<p>Relatively few organizations appreciate the full scope of flexibility available to them in terms of unlocking the value of their patents, trademarks and other intellectual property.\u00a0 One of the most overlooked methods for utilizing the value of IP is its use as collateral. This activity is becoming more common as the importance of proper intellectual property management gains recognition and as increased cash flows associated with the licensing of IP catches the eye of Wall Street.\u00a0 The highest profile examples of these transactions are probably the securitized royalty streams on the copyrights owned by famous songwriters like David Bowie and James Brown.\u00a0 However, there have been numerous instances of valuable trademarks and highly productive patents being utilized in this capacity as well.<\/p>\n<p>There are a number of reasons why an IP owner might be interested in pursuing this kind of strategy.\u00a0 First, it can provide a method for transferring some of the risk associated with the intellectual property.\u00a0 If the financing is non-recourse, the risk of receiving the royalty payments is transferred to the lender.\u00a0 Also, any risks associated with infringement and obsolescence are transferred as well.\u00a0 Second, it may increase the return on the IP through increased leverage.\u00a0 This is because the present value of impending royalty streams is being collected in a lump sum today rather than spread out over the future.\u00a0 This lump sum payment can then be invested in current projects that feature an internal rate of return that is higher than the cost of the financing.\u00a0 Any upside potential residing in the IP is typically retained by the IP owner as well.<\/p>\n<p>Third, it provides a source of capital that does not dilute the current equity structure.\u00a0 With venture capital discounts typically in the range of 25% to 50%, this is very beneficial when compared to equity sources of financing, especially for smaller technology companies.\u00a0 An additional benefit of this kind of financing is that the interest payments are tax deductible.\u00a0 This helps to offset a portion of the discount taken as a result of the present value analysis.<\/p>\n<p>To read more, download the <a href=\"http:\/\/ipmetrics.net\/cmsdocuments\/leveraging.pdf\" target=\"_blank\">full article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Intellectual property value is more readily available for strategic use than ever before.  Whether the IP owner is interested in a straightforward loan using valuable trademarks and customer lists as collateral or in securitizing the royalty payments associated with licensed technology, there are options available today that will help to reduce risk, increase return and provide flexibility for the management of intellectual property.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,11,14,16],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2xROl-3v","_links":{"self":[{"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/posts\/217"}],"collection":[{"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/comments?post=217"}],"version-history":[{"count":0,"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/posts\/217\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/media?parent=217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/categories?post=217"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.ipmetrics.net\/blog\/wp-json\/wp\/v2\/tags?post=217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}