ELZABURU

Fashion Law. Valuation of intangibles (XII)

The ELZABURU firm has had the pleasure of collaborating with the Thomson-Reuters Aranzadi publishing house on the work Fashion Law, a pioneering treatise in Spain on fashion law, which was presented on April 16.

With these small weekly summaries, the ELZABURU professionals who have collaborated on the work offer us a brief overview of their contribution:

Valuation of intangibles

With the passage of time, intellectual assets have been gaining more and more weight in the value of companies dedicated to fashion, with the most valuable companies in the world being those that have brands, patents or designs with million-dollar valuations.

La valuation of an intangible asset in the world of fashion It is a challenge due to the non-physical nature of these assets, as it incorporates numerous factors that are difficult to assess with traditional asset valuation methods, which tend to be more adjusted to tangible assets.

Just as important as knowing the value of a company's material assets is knowing the value of its intangible assets, as they constitute a very relevant part of the company's value.

These valuations may be motivated by very different reasons: accounting for the intangible assets of a company for legal and tax purposes, contribution of assets to a company, licensing of the same, compensation in litigation or constitution of chattel mortgages on the assets or other operations.

Likewise, it is also interesting to carry out an assessment of the intangibles when a process of improvement is being carried out. due diligence or audit of a company. In a generic way, this would be done in the following way: identify which intangible assets are possessed and which would enter the process, determine the existence of rights over them, check their status and check the impact of these assets by rights of third parties and Finally, carry out the valuation of the intangibles themselves.

In the valuations of intangibles, professionals from different areas must intervene to obtain an estimate that is as approximate as possible and always taking into account the circumstances that surround them.

Hay two major approaches that must be taken into account when carrying out a valuation of intangibles: the quantitative approach (numerical and economic data) and the qualitative approach (quality and external factors).

Before making this assessment, you must be clear about the reason for the assessment, to choose what method or methods to be used. Broadly speaking, these are the main methods:

Cost method: it is the cost incurred for its generation or replacement.
Income Method: The present value of the economic benefits expected over the useful life of the right.
Market method: the price that other acquirers have paid for similar rights in the market.

As there are different types of intangibles that can be valued, these methods will be adapted in different ways to each of them, and it may sometimes be more advisable to follow one or the other depending on the circumstances of each case.

Author: Cristina Espín

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La Fashion Law series It is made up of the following deliveries:

1. The protection of brands in the fashion sector (23.04.2018)

2.The protection of designs in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5.Image rights in the world of fashion (28.05.2018)

6.Data Fashion: privacy and data protection issues (04.06.2018)

7.Counterfeiting and piracy in fashion (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.LCorporate reputation in the fashion sector (25.06.2018)