Why having intangible assets is such a good predictor of future performance and growth
One of the fastest growing areas of the economy is the so called “flat white” economy. It is a convenient and memorable phrase rather than a true reflection of what is involved in the creative industries and processes behind them. It covers everything from software and broadcasting to detailed R&D in the car industry. Indeed, the UK really excels itself in this area.
So, why is it so important to the UK? Well, as we no longer tend to mass manufacture items (with the notable exception of cars), what we do is in fact a lot of research, development and creativity. These are often at the core of our service industries. By way of example, all of the formula one race teams have their research done in the UK. We’re still at the heart of chemical, pharma and engineering research and development and specialist production of many goods. The reasons for this are clear; good quality universities and a generally well-educated population have made us global players for IP creation.
We’re also at the forefront now of lending against IP assets – a world first, which is explored in my VIP Podcast with Martin Brassell of Inngot. Martin has been looking at the value of IP in business for many years and he created a software tool that we’ve used several times for IP valuations. However, Martin’s work now has some impressive credentials and supporting information from the World Intellectual Property Office (WIPO) and places such as the UK Intellectual Property Office or IPO who look at long term trends in businesses. Every single report points in the same direction. IP businesses are significantly more successful and less likely to default than other businesses who have fewer or no IP assets.
Such solid data has now made the UK banks sit up and listen to what it is they should look for in a lending risk profile. Indeed, they’ve now created lending products specifically targeted at lending against the IP itself. NatWest and HSBC are the first main stream lenders to take up this opportunity.
Martin recently toured South East Asia – another vibrant hub for IP creation. He was on a lecture tour which included speaking to IP professionals as well as the Government of Singapore. If we want to keep ahead of these tiger economies, then we need to look out for the future as they’re often quicker to embrace change and do the hard yards faster than UK companies.
So, what IP assets do you have sitting there unrecognised, underused or undervalued? Do let me know. My mission is to help more companies create more value and become wealthier using their IP. I’d love to help you do this, with or without an official valuation.
Email liz@virtuosolegal.com