The Relief From Royalty Method (Part I of V) This is the first article of a five-part series that focuses on what valuation analysts and owner/operators need to know about one category of intangible property: intellectual property. There are generally accepted cost approach, market approach, and income approach methods that may be used to value intellectual property. This discussion focuses on the application of the market approach. This discussion focuses on one market approach valuation method: the RFR method. The RFR method is often applied to value an owner/operator’s intellectual property for transaction, taxation, financing, accounting, litigation, and many other…
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Reflections on the Ninth Circuit’s Decision in Amazon.com, Inc. v. Commissioner What is included when valuing intangibles assets for transfer pricing purposes? This is an issue that was addressed once by the U.S. Tax Court and more recently, the Ninth Circuit Court of Appeals. In a unanimous decision by the U.S. Court of Appeals for the Ninth Circuit (issued on August 16, 2019) the court of appeals affirmed the decision of the U.S. Tax Court in Amazon.com, Inc. v. Commissioner, 148 T.C. 108 (March 23, 2017). The court held that intangible assets under the U.S. transfer pricing regulations, under Section…
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Lessons on Ill-Conceived Strategies that Companies Should Avoid Doing in Business and in Litigation Being aggressive in business and in litigation is considered an advantage. But, as illustrated in a recent 7th Circuit case, it is possible to be overly aggressive. When this is coupled with some serious mistakes in business and in litigation, it can be disastrous. The cases, 4SEMO.COM Incorporated v. Southern Illinois Storm Shelters, Inc., Ingoldsby Excavating, Inc. and Bob Ingoldsby, 7th Circuit Court of Appeals, Nos. 18-1998 and 18-2095, October 7, 2019) offer experts, lawyers, and business owners lessons on how an unchecked ego and an…
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Part II: Nine Additional Reasons a Valuation Is Needed in Chapter 11 This second part of the article focuses on the remaining nine reasons a valuation of IP is necessary in a Chapter 11.
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Part I: Three of the 12 Reasons a Valuation Is Needed in Chapter 7, 9, and 11 This two-part article summarizes the various types of intellectual property that valuation analysts (“analysts”) may encounter within a commercial bankruptcy controversy, lists the generally accepted intellectual property valuation approaches, and presents the reasons why analysts may be asked to value intellectual property within a commercial bankruptcy environment. In Part I, Mr. Reilly identifies three of the 12 reasons why a valuation is needed in a bankruptcy proceeding.
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A Primer on the Approaches and Issues Involved in Valuing Trademarks Valuation analysts are often called on to perform valuation, damages, and transfer price analyses of trademark-related intangible property for various purposes. This discussion describes the valuation of trademarks within the context of both financial accounting and income tax accounting (in particular, tax-related intercompany transfer pricing) and summarizes the generally accepted trademark analysis approaches and methods. And, this discussion presents three examples, using different analytical methods, to illustrate the analysis of trademarks.
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The FASB Lists 29 Different Intangible Asset Categories. Here’s What You Need to Know. Intangible assets have comprised an increasing proportion of the value of assets of most companies in the last decade, Gregory Marsh explains. Often a collection of intangible assets is accounted for as a single asset labeled “goodwill.” Here’s why that sometimes doesn’t make sense.
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Valuing Trademarks When Diamond Foods bought Kettle Foods, nearly 40 percent of its purchase price of $616M was paid for “brand intangibles.” How are such valuations determined and what are the drivers?
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The Wall Street Journal’s Small Business Blog featured recently a guest column by Antone Johnson on the use, misuse, and misvaluation of intellectual property. It’s probably of interest to valuators and financial consultants who are working with small business owners to value and growth their businesses. Venture capitalists, angel investors and start-up lawyers these days tend to be obsessed with “intellectual property,” or IP. And for good reason: In the information economy, the core assets of a new venture are likely to be talented people, the IP they create, and little else. To maximize future value, founders should…