The new issue of Intellectual Asset Management (IAM) was released with some fantastic features. One of note, written by finance editor Nigel Page, touches on the world-wide recession with a force of optimism for IP as a real asset class. Asserting that the financial meltdown is actually the very thing that will lead to IP as a tradeable asset, Page writes that, “[a]lthough everyone acknowledges that these are difficult and uncertain times, the general view is that IP and intangibles in general may not only survive the storm, but may actually prosper. In fact, some predict this could be the beginning of a brave new world for IP’s status as a steady, conservatively valued and uncorrelated asset class.” (The feature, titled “A Flight to Quality”, and the entire 33rd Issue of the magazine can be found HERE.)
The article predicts a fire-sale of IP in a market climate that is brooding uncertainty in traditional revenue streams. According to Page, executives are having to value their company based on its assets, and not on continued revenue, in order to appease shareholders. In this light, IP is (finally) being added to the balance sheet as an asset, and then “asset” sales can be counted to increase a company’s cash and value. Concerning licensing, the article reports that it is bound to increase as well.
Even more interesting, the article harps on the theory that this author has predicted for some time: increased activity from hedge funds and other insitutional investors in the IP market. The following is possibly the most telling excerpt from the article:
“A number of trends are driving hedge funds and private equity funds towards a deeper awareness of IP. Over in Silicon Valley, Ron Epstein of IPotential reports seeing an increased focus by banks and venture capital funds on investing in IP as a means of recouping the bridging loans they made to tech companies. “As people withdraw their money from traditional investments, we’ve seen no slackening of interest in patent purchasing,” he explains. There is now every indication, Epstein says, that having started to view patents as capital assets, investors (including hedge funds and private equity funds) are looking at how to channel money into IP. “The market is liquefying now and, as this happens, investors are becoming increasingly interested in it,” he concludes.”
Behold, IP is becoming an asset class and an investment tool for the institutional investors. Fasten your seatbelts.
(Again, the feature, titled “A Flight to Quality”, and the entire 33rd Issue of Intellectual Asset Management can be found HERE.)