Valuation of Intangibles in Restructuring and Bankruptcy Processes, M&A and Audits

Intangible assets have gained prominence not only as a source of competitive advantage but also as a key component in the context of major transactions, whether in asset sale or license operations or in more complex operations such as business combinations or restructurings. 

 

In this context, an accurate valuation of the transferred intangible assets is a fundamental tool both from a strategic point of view to simplify the negotiation process and bring out the value of the intangible assets, as well as from an accounting and tax point of view, to in order to comply with the accounting regulations regarding the treatment of intangible assets (IAS 38), the international financial reporting standards in the context of business combinations (IFRS 3), and the general recommendations of the OECD and current tax regulations on matters transfer pricing.

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At Cabrerizo & Del Santo Abogados we offer valuation services aimed at determining the fair value of intangible assets as independent experts. Our methodology adjusts to different contexts, types of intangible assets and valuation scenarios. For this we follow the following steps:

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• Identification and analysis of intangible assets to be valued.

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• Selection of the valuation methodology that best fits the context of the operation.

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• Market approach: this methodology consists of the use of multiples, based on prices paid in previous transactions for comparable intangible assets.

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• Income approach: its basis is the classic cash flow discounting financial methodology, which assumes that an asset is worth the current value of the returns it will generate in the future, through the commonly known DCF or cash flow discounting method. and its different variants, among which the royalty savings method, the incremental cash flow method, the real options method or the method of contribution to profit or excess returns in multiple periods stand out.

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• Cost approach: if none of the methodologies were applicable, the cost approach will be used, which determines the value of the asset either by the costs that have been incurred for its development or by the costs that would be necessary to incur to develop a similar asset.

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• Finally, a detailed valuation report is carried out where the fair value of the asset is justified and all the points analyzed in the process to reach said conclusion.

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• Valuation and analysis of the portfolio of Industrial and Intellectual Property rights in Restructuring and Bankruptcy Processes: analysis of intangible assets (Patents, Utility Models, Trademarks, Trade Names, Copyright, Software, etc.) and determination of their value at effects of quantification, sales processes, assignments, etc.

 

• Valuation criteria: territorial protection, legal life, licences, litigation, etc.

 

• Valuation of assets in due diligence processes, mergers and acquisitions of companies, M&A.

 

• Analysis of assets in the preparation of audits.