EverEdge Insolvency Services
Unlock value from distressed assets
Covid-19 is causing (and will continue to cause) a significant increase in business failures. The result will be major losses for employees, creditors, and shareholders.
However, it is possible to recover substantially more from a failed business than many people realize if the value of a failed or failing company’s intangible assets can be unlocked.
EverEdge’s Insolvency Services will help you preserve and monetize intangible asset value in a distressed situation
Preserving value in distressed situations
In a distressed situation receivers and liquidators tend to focus on cash, cash equivalents (such as accounts receivable and debtors) and fixed assets (plant and equipment, inventory, and real estate) to repay creditors or equity holders.
Intangible assets tend to be overlooked or written off as “too hard.” Any value that intangible assets are perceived as having is generally only in the context of the sale of the business as a going concern. They are rarely seen as a distinct driver of value.
EverEdge helps companies, investors and receivers identify and monetize residual value in intangible assets during a business failure.
Identifying & Monetizing Residual Value in Intangible Assets
Where a distressed entity remains intact, the intangible assets can have a higher value in the hands of a third party than the business itself.
For instance, a company may have a product design and associated brand that under performed in the hands of management, resulting in poor financial outcomes. In the hands of an acquirer (especially a larger company) with stronger market or distribution channels or more cost-effective production the intangible assets in design and brand could be worth far more to the acquirer than the original owner.
EverEdge helps companies and investors identify critical intangible assets, their value and strategies to monetize them.
Industry Case Study: Marvel
In 1996 the comic book maker Marvel was acquired out of bankruptcy for cents on the dollar. The new owners eliminated all fixed assets and focused on the real asset: Marvel’s back catalog and its roster of super-hero characters. These were licensed for movie production. In 2009 Disney acquired Marvel for $4.3 billion. 10 years later Avengers End Game (based on Marvel’s content) became the highest grossing film of all time, generating $1.2 billion in its opening weekend.
Identifying The Key To Someone Else's Lock
Certain intangible assets such as brands, data, patents, product designs, software code and content can have distinct value that is severable from the business itself. For instance, a company may own a patent that it has been unable to commercialize itself (burdening it with legacy R&D and IP costs) but in the hands of another company with better market access that same patent could be worth vastly more.
EverEdge can support a targeted intangible asset sales process to enable companies to unlock value from distressed assets.
EverEdge Case Study: Failed Start-Up
EverEdge was approached by investors in a failed start-up who wanted support to identify whether there was any salvageable value in the company. The management team were long gone and the only assets remaining were intangible. The investors wanted to understand if these assets were worth anything.
EverEdge determined the company was sitting on highly valuable intangible assets unidentified by management. We then identified buyers, prepared sales documentation, ran a sales process and ultimately sold that intangible assets for tens of millions of dollars, returning $45 for every $1 the investors had put into the start-up. In all probability, the investors made more money from the start up failing than if it had “succeeded” in its target market.
It is possible to preserve and monetize intangible asset value in a distressed situation but it is critical that companies, investors and liquidators take action fast.