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Invisible Wealth: Unpacking Intangible Asset Valuation & Finance with Martin Brassell
Manage episode 437090798 series 3596348
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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 skepticism 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.
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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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