The use of IP value for loan collateral is more prevalent now than in the last eight years. Does that mean that senior lenders are actively pursuing these loans? Not exactly, as most IP-Collateralized debt is provided by specialty financing sources. Another reason for developing current IP market values is to support equity funding for early stage firms.
Additional requirements for IP valuations are the following:
- Sale and license-back agreements to raise capital.
- Asset licensing for a royalty stream.
- Asset transfers between corporate entities wholly or partially owned by the same shareholders.
- Basis for establishing the transfer pricing between related U.S. and foreign entities.
- Support for Bankruptcy Court to allow emergence of business from Chapter 11 proceeding.
- Resolution of financial damages in lawsuits involving IP.
- Critical value driver for a selling company.