Include intangibles as boot collateral and you are likely to be missing a trick. Ignore them entirely at your peril.

Intangible assets accompanying a deal can often be integral in supporting the value of other assets such as plant & machinery and stock. There could also be other hidden IP that has latent commercial value yet remains under the radar. Identifying and evaluating IP’s potential presents an opportunity for bankers and insolvency practitioners to realise greater returns.

Robust methodologies are used regularly to evaluate the opportunity. The IP can then be reliably securitised, enabling the borrower to raise more capital and the bank to increase the loan amount with lower risk. The exit strategy is also planned so that in a distressed situation the asset can either be managed for return or sold. A structure is put in place prior to securitisation to facilitate this.

We did exactly this recently with GoIndustry for KBC’s client Burn Stewart Distillers, the Scotch whisky producer and brand owner. We valued its whisky brands alongside its inventory which, when combined with the property value, supported an integrated asset based loan facility of £31m.

Acquisitions and disposals frequently disregard intangible assets, either because they are considered immaterial or go unnoticed. We’ve recently seen the value of a number of intangibles, such as customer lists, databases and contracts for usage rights, be nearly missed entirely during disposals by insolvency practitioners or corporate financers, when their value was quite substantial.

Identifying and valuing the intangible assets is the first mandatory step. Once its value has been established plans can be put in place to realise the value by sale and management. The preferred exit strategy is usually selling the IP but in order to do this the asset first has to be identified and valued.