Zenith Electronics owned significant valuable legacy intellectual property while Asia was making its final ascent as the electronics manufacturer or the world. The Company needed have access to capital for research and development, CAPEX for modernizing manufacturing, and moving factories to lower cost regions, such as the Maquiladora. IP monetization was the solution.
After a review of costs of capital up and down the balance sheet, we determined that the most efficient capital raise would be based on IP monetization of certain royalty streams of the company. We estimated the cost of capital for the licensees, and conducted present value calculations based upon the remaining life of the company’s patents. We then looked at the same valuations using Zenith’s incremental cost of capital. The gap between the Licensees’ PV and the Licensor’s PV was the delta we had to work with, and it was significant. This represented a significant potential source of cash of over $100 million.
For more see: Intellectual Property Monetization