Why Protecting and Valuing Intellectual Property Matters
Today, intangible assets make up 90 percent of the value of S&P 500 companies.1 Most of this value is in the form of intellectual property (IP), including patents, copyrights, trademarks and trade secrets. IP assets can allow organizations to strengthen their financial position,2 access new sources of capital and monetize innovation.
Intellectual property and other intangible assets are often overlooked and under-valued, which means that many organizations are not adequately protected from IP risk.3 Businesses need to properly value these assets and protect their IP from infringement. They also need to protect their organization from allegations of infringement by other companies.
When approaching an initial public offering (IPO) or considering merger and acquisition activities (M&A), it’s critical that businesses know the value of their IP to help maximize the terms of a deal.4 Outside of an IPO or M&A deal, accurate valuation can help an organization protect its IP while gaining a competitive edge. A solid IP strategy also helps to create a roadmap for future innovation.
Having a strong understanding of the opportunities and risks that accompany intellectual property assets is essential for leaders across an organization.
Explore our insights that help organizations make better IP asset decisions:
Companies typically value intangible assets higher than tangible assets. But tangible assets, despite their lower value, are insured to a much greater extent: 58 percent compared to just 16.6 percent.
Source:
2022 Intangible Assets Impact Report
In the past two years, 35 percent of survey respondents said their company experienced an IP-related event such as an infringement on trade secret rights. Many companies’ insurance does not cover all consequences of an IP event. Only 31 percent of respondents reported that their insurance covered an allegation that their company was infringing third-party IP rights.
Source:
2022 Intangible Assets Impact Report
The value of Probable Maximum Loss (“PML”) is higher for information assets than for physical assets. Companies estimate the average PML resulting from stolen or destroyed information is ~1,152 million which is ~37 percent higher than average losses from PPE.
Source:
2022 Intangible Assets Impact Report
1 Intangible Asset Market Value Study
2 What is Intellectual Property Financing and You Should Know
3 Intellectual Property: The Unprotected Corporate Asset
4 The Right IP Strategy Can Maximize Enterprise Value – IPO, M&A, Enterprise
