Sale and leaseback – a model for increasing trust in IP assets?

By Stephen Robertson

Placing a tangible financial value on a brand and then leveraging that value remains a frustratingly opaque process. However, the creation of secondary markets to sell IP assets has encouraged lenders to look more closely at this asset class

The power and value of a brand are rarely contested; in fact, brands are often considered to be a business’s most valuable IP asset. However, a brand’s financial value is often hard to quantify – the process of providing a brand with a tangible financial value and then leveraging that value remains frustratingly opaque. Under internationally recognised accounting rules, a company cannot value its own internally generated brand and capitalise it on its own balance sheet. The only way to put a brand on a balance sheet and have its value recognised is through a transaction; in other words, through selling the brand from the trading business that owns and uses it (TradeCo) to a separate company, such as a holding company or special purpose vehicle (SPV). TradeCo can then license back use of the IP assets it has just sold from the SPV, as in a traditional sale and leaseback arrangement.

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