QUALITY OF IP
INTELLECTUAL PROPERTY DUE DILIGENCE
Private equity, growth equity, and hedge-fund investors all perform rigorous Quality of Earnings (QoE) analysis. QoE is the cornerstone of due diligence, and it would be investor “malpractice” not to perform in advance of any significant investment.
We believe Quality of Intellectual Property (QoIP) analysis is as important as QoE analysis. QoIP helps investors reduce post-transaction risk, aides in purchase price negotiations, and identifies value creation upside. QoIP reports will provide investors with leverage.
Quality of IP - Risks and Opportunities Assessment
Comprehensive IP Ownership Assessment
• Does the company have clear ownership rights?
• Are patents properly assigned to company or investors?
• Are there encumbrances or liens on the patents / IP?
• Is the company involved in IP litigation? If so, what is their strategy?
IP Strength & Weakness Analysis; Competitive Exposure
• How strong are the patents and IP versus competitor portfolios?
• Are the keystone patent claims defensible?
• Is there prior art that could potentially invalidate company’s patents?
• Are company products vulnerable to patent infringement lawsuits?
• Which products / revenue streams are supported by IP and which are not?
• What is the patent and IP competitive landscape?
IP Value and Monetization Evaluation
• What is the real value of the company’s IP?
• Is the IP value vastly overstated or understated?
• How does the value align with Balance Sheet Intangibles & Goodwill?
• Is there an opportunity to license or sell unused patents?
IP Expense Forecast
• Are patent maintenance fees properly accounted for looking forward?
• Is there an opportunity to reduce annual patent expenses?