Intangible assets, such as brands, patents, trade secrets and data, have evolved to become key drivers of value for modern businesses, in many cases exceeding the value of traditional physical assets, such as factories and equipment. However, their management and valuation pose significant challenges for financial professionals and businesses in general.
One of the most important challenges in this area is the accurate valuation of these assets. Traditional valuation methods, such as cost of creation, capitalization of income and discounted cash flow, have limitations in the context of intangible assets. For example, creation cost may underestimate the value of an asset by not considering its future potential, while income capitalization may be more effective for new or growing assets.
Identifying which intangible assets are the key value drivers for a company and establishing appropriate performance indicators are critical steps in this process. Financial and non-financial key performance indicators (KPIs) can help measure the effectiveness of intangible asset management and its impact on overall company performance.
On this topic WIPO[1] explains that in the context of debt financing transactions, it is common for lenders to require borrowers to offer assets as collateral before granting them a loan. This measure provides the lender with a way to protect itself in the event that the borrower defaults on its payment obligations. Collateral-backed loans are often more accessible and affordable for businesses compared to other forms of credit.
Traditionally, tangible assets, such as equipment and buildings, have been used as collateral in these agreements. However, it is increasingly common for intellectual property assets, such as copyrights, designs and patents, or the income derived from these assets, to be used as collateral for loans. This practice reflects the growing recognition of the value of intellectual property in the financial sphere.
When intellectual property is used as collateral, the borrower typically retains ownership of the assets. However, the lender may impose certain conditions on its future use. These conditions could affect the borrower’s ability to license or transfer intellectual property to third parties, which may limit its operational flexibility.
To gain a closer look at these experiences and learn concrete data from them, WIPO has published a series of reports entitled: “Access to intellectual property-backed financing: Country Analysis” which provides all the required information on the subject. In any case, Fernández Lacort is here to offer you expert advice on any issue related to business or intellectual property in the world.