Metis Partners – Experts in IP assets www.metispartners.co.uk

Metis Partners Ltd Trinity House, 33 Lynedoch Street

Glasgow G3 6AA Tel 0141 353 3011

Recognising Intellectual Property assets (‘IP assets’) – some quick examples

PRINT BUSINESS

The first example is of a printing company that created a possible IP asset in the process of solving a client

problem. The printing company developed a sticky label for frozen chickens that would not peel off with variances

in temperature in retailers’ freezers. The client had also requested that eco -friendly water-based inks were used. The

printing company came up with a solution and did a large print run for their client, who was delighted with the

results. The printing company did not recognise any value in the product development instead saw it as ‘just coming

up with an idea to win an order’. The know-how and possible IP asset value was overlooked by the company and was

never fully exploited.

Metis Partners recognised that there are innovation and potential IP value in what they had done and that this IP

could create real competitive advantage.

Observation: identify IP assets and use them to create opportunities for competitive advantage and

generate additional revenue streams – monetise your IP assets.

MANUFACTURING BUSINESS

Another example of monetising IP assets includes a highly-specialised £6m turnover manufacturing company in a

very competitive sector. The company was being squeezed on price by customers and as a result turnover was falling.

After some analysis it was clear some of the contracts were actually unprofitable. The company had been

manufacturing its products for years, so underestimated the value of its manufacturing processes (IP asset) and the

high specifications it achieved.

Metis Partners conducted analysis of the IP assets within the context of the sector and identified that the cost to a

customer of changing supplier would be significant. A new supplier would need to develop a product specification,

gain accreditations and test safety standards – a process which could take around six months from an initial order to

a prototype. Therefore, a customer switching to a competitor would suffer significant delay and interruption to

business as well as a cost of up to £60,000 in prototype development. Once the company recognised the value of its

know-how & IP assets (technical specs.) the business strategy was amended.

Metis Partners recommended that customers were offered two alternatives – accept higher prices or be forced to

switch to a competitor. To ease the costs and interruption to business of such a switch, the company offered to sell

each customer their technical specifications for up to £25k each (to be passed onto a competitor) thereby making a

profit from an unprofitable customer on the back of undervalued IP assets.

Observation: identify the value of your IP assets to customers and recognise the opportunities for

generating future revenue streams from them – monetise your IP assets.

CONSUMER BRAND BUSINESS

Another example is of a £3m turnover trading company with working capital problems but with a reasonably well

known product brand in their niche sector. The brand (IP asset) was undervalued and the company’s financial

position was compromised by high levels of debt which made it difficult to refinance its working capital.

Metis Partners packaged the brand (various trademarks registered in different countries), valued it and sold it to a

related but separate company / IPCo (same shareholders). The use of the brand was then licensed back to the

trading business for a royalty / commission based on future sales.

The price paid by IPCo was met by transferring some debt from the trading business across to the IPCo thereby

significantly improving the trading company’s balance sheet and the IPCo debt was repaid from guaranteed royalties

on product sales.

Observation: consider the value of the brand / IP assets outside of your current business model and explore

ways to leverage these IP assets and generate additional future revenue streams - monetise your IP assets.

Metis Partners – Experts in IP assets www.metispartners.co.uk

Metis Partners Ltd Trinity House, 33 Lynedoch Street

Glasgow G3 6AA Tel 0141 353 3011

SOFTWARE BUSINESS

Another example is of a software business that was losing potential customers at an early stage of a six-stage sales

process. After some analysis, Metis Partners discovered that at Stage 2 of the sales process, the software company

was providing free consultancy (giving away valuable IP assets). This was in the form of know-how about how to

develop a new business channel strategy (based on what they had learned from other customers), with the company’s

software at the heart of it. As a result, by the time the potential customer approached the end of the sales process,

they knew how to build new channels themselves and so they channel-hopped and went to alternative, cheaper

software provider.

Metis Partners recommended that the company move this valuable know-how (which we identified as IP assets)

from Stage 2 to the end of the sales process by which time the potential customer was locked into a sale.

Alternatively the consultancy could be provided as an additional paid service.

Observation: recognise what your customer is buying from you (know-how and software) and make sure

you protect it and create opportunities for additional revenue streams – monetise your IP assets.

MANUFACTURING BUSINESS

Another example is a UPVC door manufacturer who was sceptical about IP assets. Metis conducted some

preliminary business analysis and discovered that security equipment manufacturers Chubb had designed and

manufactured a high security lock specifically for their top of the range UPVC door.

Metis Partners identified the potential intellectual property (IP) surrounding this specific design. We recommended

that the company approach Chubb about protecting the IP in the new lock and request exclusivity to ensure they

wouldn’t supply these locks to competitors, thereby creating further barriers to entry for competitors. Furthermore,

we recommended that the company seek clarification on the safety features of the lock and the potential for this to

gain competitive advantage as many insurers reduce the premium for house-insurance based on additional home

security features, thereby saving the UPVA company’s customers some money.

Observation: some IP assets can be jointly created - recognise where they could create value / competitive

barriers to entry to ensure they generate additional future revenue streams - monetise your IP assets.

FOOD & DRINK / RETAIL

The final example is of a struggling restaurant business that had a website that allowed customer orders to be

placed and paid for over the internet. The order was then routed to the nearest restaurant geographically to the

customer.

Metis Partners identified this order process as a potential e-commerce asset and was therefore an IP asset of the

business. We recommended that this IP asset be spun-out into a separate company. When orders were placed by

customers, the e-commerce business would then charge a transaction fee to the restaurant for using the e-commerce

system, thereby building up a new and unencumbered revenue stream independent of the restaurant business.

Metis Partners also recommended that the company maximise the value from its customer base and brand. The

restaurant had built up a database of customers’ eating preferences and likes and dislikes via their website and so

there was the potential to license use of the ecommerce system and database to other parties for a fee, who were keen

to target the same customer base.

Metis Partners also identified the potential for an additional revenue stream outwith the restaurant business but

linked to the restaurant brand. We suggested that the restaurant brand could be transferred out of the restaurant

business and into a separate company and the use of the name licensed back to the restaurant business and the

ecommerce business for a fee. This would create a new and unencumbered revenue stream.

Observation: identify the various IP assets that exist in your business and think of how you can create

separate revenue streams around them - monetise your IP assets.