A report commissioned by the UK Intellectual Property Office (IPO) says that businesses in the UK are not making the most of their innovations and ideas. The only way to do this is to identify and put a specific value on their Intellectual Property (IP).
The report was released on 27 September, and is called Hidden Value: A Study of the IP Valuation Market.
Intangible assets
Findings from the report state that 70% of the typical worth of a company is in its intangible assets. Further, the report says that 13% of companies have never tried to value their IP assets.
The five most common reasons behind this are:
- The lack of awareness and understanding of the benefits of the process.
- Lack of understanding of how to find a valuer.
- Lack of availability of information.
- Limited ability to use the IP to raise finance.
- Other business concerns considered more important.
The report says: “Over a third of the respondents who stated that they had not had an IP valuation had previously considered getting one. The remaining 65% had not considered obtaining an IP valuation and no one had told them they should have one. This appears to confirm a lack of awareness of valuation benefits.”
IP valuation
The compilers of the report analysed 250 individual contributions, by way of interviews and online surveys.
More than 70% of those who have already had valuations reported that they had gone through the process only once and never repeated it. Of the companies that do have valuations, more than a quarter reported that they have had ten or fewer.
When this is compared with practices employed for tangible assets, the valuation of IP falls short of what should be expected. Dawn Ellmore Employment feels that as there is a substantial investment into creating intangible assets, their valuation should be of higher priority.
The report concluded that: “… opportunity led IP valuations appear to have the best prospects for growth in the near term.”
Potential solutions
Various potential solutions are cited in the report, based on the research and interviews conducted. Any new approaches by companies would need to be part of a wide-reaching, strategic programme of best practice in partnership with industry and professional bodies to be effective.
Suggested solutions include:
- Using case studies to highlight the benefits of valuing IP.
- Extending the IPO’s tool kit so that it includes an open directory of IP valuers.
- Introduction of a tailored outreach programme by the IPO to include incentives and education aimed directly at businesses and intermediaries.
- Further research undertaken to help form a more sophisticated understanding of the link between IP strategy and valuation of intangible assets.
- A comparison of valuations that have been carried out by buyers versus sellers.
- Initiation of communication between the IPO and industry bodies to work out how best to introduce voluntary IP statements or labelling. This could be part of the annual financial statement or as part of CSR (corporate social responsibility) reporting.
About Dawn Ellmore Employment
Dawn Ellmore Employment was incorporated in 1995 and is a market leader in intellectual property and legal recruitment.
