© CONSOR 2013

Valuation of IP for Acquisitions and Brand Value Enhancement

CONSOR Intellectual Asset ManagementBusiness Valuation Resources

September 25, 2013

Weston AnsonChairman

wanson@consor.com

Jeff AndersonDirector, Valuation and Analytics

janderson@consor.com

© CONSOR 20132

Contents• Part I: IP Valuation Overview

• Overview of Intangible Assets and Intellectual Properties

• Bundling/Asset Triage

• Valuation Issues for Different IP Bundles

• Valuation Methodologies

• Part II: IP Monetization Strategies

• Part III: Case Studies

• M&A Case Study

• National Lampoon Case Study

© CONSOR 20133

Part I: What is IP?

3

Intellectual Property vs. Intangible Assets

Bundles of IP and IA Assets

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Property Types

4

IA vs. IP: Commercialized Separate from Other Assets

Internet AssetsInternet Assets

Data BasesData Bases

Intellectual Properties

Intangible Assets

Customer & Vendor

Relationships

Customer & Vendor

RelationshipsPatentsPatents

CopyrightsCopyrights

TrademarksTrademarks

Trade SecretsTrade

SecretsProprietary

SystemsProprietary

Systems

© CONSOR 2013

Asset Identification Trademark/Brand Bundle

5

Bundles of Intellectual Properties (IP),each contain Intangible Assets (IA)

Trademark/Brand Bundle• Primary Trademark

• Corporate Name and Logo

• Sub-Brand Names

• Copyrights

• Packaging Design

• Marketing Umbrella Campaign

• Corporate Colors

• Secondary Trademarks

• Trade dress

• Worldwide trademark registrations

• Patterns

• Designs

• Characters

• Vendor Relationships

• Vendor Contracts

• Website

• Advertising Concepts

• Graphics

© CONSOR 2013

Asset Identification: Key IP Bundles

6

Bundles of Intellectual Properties (IP),each contain Intangible Assets (IA)

Patents/Technology Bundle People-Related Assets

Software/IT Bundle Online Bundle

• Key Patents

• Trade Secrets

• Technical Know How

• Process Technology

• Proprietary Test Results

• Product Specifications

• Specialty Business Skills Systems

• Work for Hire Contracts

• Non-compete Clauses

• Customer Relations

• Mailing Lists

• Open Purchase Orders

• Retrieval Systems

• Platform Software

• Data Warehouses

• Software Licenses

• Source Code

• Copyrights

• Databases

• Data Mining Devices

• Domain Names

• Website Design

• E-Commerce Website

• Social Media Sites

• 1 (800) Number

• Topline Domains

© CONSOR 2013

Key Concept: Asset Triage

• Triage is the prioritization of asset bundles

• Group A: Significant value, readily monetized• Trademarks, Patents, Software, Copyrights

• Group B: Have value, but difficult to monetize• Online, Databases, Customer Relations, Characters, Colors

• Group C: Assets with potential value• Packaging, Product Shapes, Proprietary Systems

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Trademark Valuation Issues

• Classes of registration• Geographic coverage• Competing registrations• Comparison to similar trademark assets• Identification of specific income or royalty streams• Establishing accurate remaining useful life• Difficulty of accurately assessing strength of

trademark • VALMATRIX® Analysis can be applied

© CONSOR 2013

VALMATRIX® Trademark Strength Analysis

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The Next Step

Once assets have been identified and bundled, the next step is valuation.

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Standard Valuation Methodologies

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Economic principal of substitution

Measures expense required to replace

Neglects future benefit

Present value of future economic benefit

Requires projections and a risk assessment

Requires allocation of benefit specific to the

asset

Value based on price of similar assets

Requires suitable comparable assets

Des

crip

tion

Replication / replacement feasible

Benchmarking

DCF

Relief from Royalty

Price Premium

Comparable transactions

Benchmarking

App

licat

ion

Valuation as Art and Science

Cost Income Market

© CONSOR 2013

Hybrid Valuation Methodology

12

Combination of Market and Income Approaches

Present value of future economic benefit

Requires projections and a risk assessment

Based on licensing transactions of similar assetsD

escr

iptio

n

DCF

Comparable licensing and other CF transactions

App

licat

ion

Relief from Royalty/Income Premiums

Often one of the most common and widely accepted methods of IP valuation

© CONSOR 20131313

Alternative Valuation Techniques and Methodologies

13

• Competitive Advantage Techniques: based on the supposition that a company has an advantage over its competitors, because of proprietary technology, patents, trademarks or other intangible assets. That competitive advantage can sometimes be measured or quantified based on market share, growth, competitive pricing, etc.

• Premium Pricing Technique: Value is established by looking at the price premium paid for a product bearing the trademark relative to equivalent products without the trademark. The net present value of the projected price premium is an indication of the value of the asset.

• Options Models: allow for the evaluation of multiple possible outcomes with the assessment of risk driven by probability rather than historical financial returns. Common options models include: Black-Scholes, Monte Carlo, and Binomial Options Pricing.

• Return on Assets Employed: a method used by economists and accountants to back into the value of intangible assets. Similar to an accounting calculation for a purchase price allocation, the value of intangible assets are determined by calculating the market value of all tangible assets than allocating excess value to intangible assets.

• Profit Split Method: attributes a share or portion of a company’s profitability to an intangible asset. Using this method requires the ability to isolate or expressly separate the intangible asset from other business assets and to allocate some potion of gross revenues, operating income, or net income the specific intangible asset.

The Art and Science of Valuation

© CONSOR 20131414

Alternative Valuation Techniques and Methodologies

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• ValCALC® Method: a variation of the return on assets employed approach. ValCALC establishes the rate of return that each intangible asset should be earning based on calculations of adequate return for all tangible assets within a company.

• VALMATRIX® Analysis: employs a matrix of 20 predictors of value for a trademark or a patent. These predictors are then used to score the assets against those of a set of peers. The numerical score generated is then used to establish a percentile ranking relative to other brands.

• Brand Value Equation Method (BVEQTM): proprietary technique developed by CONSOR to recognize

that a brand is composed of multiple intangible assets and intellectual property elements. A core value for the trademark is calculated and then values for the additional individual intangible assets are calculated. The sum is the total brand value.

• Cost Savings Method: The amount of money that a company will save using specific intangibles instead of other alternatives. For example, Company A may have a superior blending process that enables it to reduce the number of people and the amount of raw materials need to modify product lines. The present value of cost savings would represent value.

• Liquidation Value: the price an asset would be expected to receive in a distressed or time critical situation. The value will be affected by other assets available in the marketplace. In its simplest form, liquidation value is the current value below which we can, with some certainty, guarantee the price will not fall.

The Art and Science of Valuation

© CONSOR 2013

Valuation as Art and Science

The “Art” of Valuation: Context and assumptions relied upon are key when performing a valuation of IP assets. Even scientific valuation techniques can lead to incorrect results if applied improperly.

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Cost Approach Income Approach

Market Approach Relief From Royalty Approach

Valuation Methodologies

Selecting the Appropriate Valuation Methodology (the “Science”): When valuing intellectual properties, it is essential to consider each of the different valuation methodologies, in light of the information available and the specific circumstances, in order to determine the best method for ascertaining value.

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The Valuation Answer

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Reconcile results from multiple approachesReconcile the calculations to the context

There Are No Valuation Answers: Only Good Choices

Context + Time = Value

© CONSOR 201317

Q & A

© CONSOR 2013

Part II: IP Monetization Strategies

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• Intellectual Property Sale• Sale and Lease Back• Brand Joint Venture• IP Securitization• Licensing

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Intellectual Property Aquisitions• Iconix Brand Group

• Iconix ranks as the No. 2 global licensor (second to Disney Consumer Products) and reported $12 billion in retail sales in 2011, primarily driven by direct-to-retail programs and international expansion

• Owns a diversified portfolio of brands, including:

• Along with Charles M. Schulz Creative Associates, acquired all assets related to the Peanuts comic strip from United Media for $175 million

Candie’s Joe Boxer Mossimo

London Fog OP Danskin

Marc Ecko Ed Hardy Bongo

Rampage Material Girl The Sharper Image

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Sale/Leaseback of Intangible Assets• O’Charley’s

• O’Charley’s operates 342 restaurants under three brands: • O’Charley’s• Ninety Nine Restaurant• Stoney River Legendary Steaks

• Sale-leaseback of 50 restaurants for 20 years to strengthen financial position

• TA Triumph-Adler• Document business leader in Germany• Sold their UTAX (copiers) brand and leased it back

• Travelodge• Sold hotel properties in the U.K.• Entered new contract to license back the trademarks• Used extra funds to expand the business

© CONSOR 201321

Brand Joint Ventures• Food/Beverage

• Weight Watchers: joint trade communication campaign in U.K. grocery stores• Coca-Cola partnership with the Olympics• Green Giant and Betty Crocker promotions with Box Tops for Education

• Sports• ESPN/X Games brands special promotions with Walmart, Target and at

JCPenney• Art/Entertainment

• The Thomas Kinkade Company: longstanding relationships with Disney, Warner Bros.

• Art Impressions: pop-culture brand established promotional partnerships with Taco Bell, and MyPlash/Mastercard, and supported by social media campaigns

• Technology • Motorola, Verizon and Lucasfilm introduced the Droid line of Android based

smartphones • High-tech bug zappers and landscape deco co-brands with and uses Black Flag

technology

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IP Securitization• Converting an ongoing royalty income stream into a present lump-sum

payment

• Securitization Concerns: Termination, violation, and re-negotiation of underlying license agreements; patent validity and alternative technology

Entity Value Securitized Property

David Bowie $55 million 287 song royalties

Sears Holdings Corp. $1.8 billion Kenmore, Craftsman and Die Hard Brands

Guess? Inc $75 million Trademark license agreements

Dunkin’ Donuts $1.7 billion Dunkin Donuts/Baskin-Robins brands and franchise fees

BioPharma Royalty Trust $200 million Patent royalties

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• There is no typical royalty rate.

• The most frequent rate is 5%

• 39% of agreements are for less

• 42% of agreements are for more.

Licensing Royalty Rates

Royalty Rate Distribution

© CONSOR 2013

Alternative Brand Royalty Rate Analysis

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Surveys and Comparable Transactions are not The Only Tools Available

Royalty Rate Build-up Method: BVEq

BVEQ= CBV + (IVE1 + IVE2 + …. + IVEN)

CBV Core Brand Value 5.00IVE 1 Sub-brands 0.50IVE 2 Global Brand Marketing 1.00IVE 4 New Product Development 0.75IVE 5 Other Brand Assets 0.50

Total 7.75

Rate (%)Brand Value Components

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Q & A

© CONSOR 2013

Part III: Case Studies

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• M&A Case Study• National Lampoon Case Study

© CONSOR 2013

M&A Case Study

• A private equity firm (“Finance Co.”) is considering the acquisition of technology company (“ABC”)

• To evaluate the investment, and determine a purchase price, Finance Co. needs to analyze the value of ABC’s IP assets

• This analysis of ABC’s IP assets will also be used to secure financing for the acquisition

• Among ABC’s highly sought after assets are 15 patents

Is the value of ABC’s IP limited to their patents?

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© CONSOR 2013

Asset Identification: Key IP Bundles of ABC Company

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Bundles of Intellectual Properties (IP),each contain Intangible Assets (IA)

Patents/Technology Bundle Trademark/Brand Bundle

Software/IT Bundle Online Bundle

• 15 Key Patents

• Trade Secrets

• Technical Know How

• Process Technology

• Proprietary Test Results

• Product Specifications

• Primary Trademark

• Corporate Name and Logo

• Sub-Brand Names

• Copyrights

• Packaging Design

• Marketing Umbrella Campaign

• Platform Software

• Data Warehouses

• Software Licenses

• Source Code

• Copyrights

• Databases

• Data Mining Devices

• Domain Names

• Website Design

• E-Commerce Website

• Social Media Sites

• 1 (800) Number

• Topline Domains

© CONSOR 2013

Selecting the Appropriate Valuation Methodology

When valuing intellectual properties, it is essential to consider each of the different valuation methodologies, in light of the information available and the specific circumstances, in order to determine the best method for ascertaining value.

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Cost Approach Income Approach

Market Approach Relief From Royalty Approach

Valuation Methodologies

© CONSOR 2013

Valuation of Patent/Technology Bundle

• Method: Income approach• Explanation: Since the ABC patents have generated revenue the 

income approach is used. If the patents had not yet generated revenue the cost approach would likely be used.

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Annual Free Cash Flow Generated by the Patents/Technology a $1,200,000Discount Rate b 20%Perpetual Growth Rate c 5%Total Value of Patent/Technology Bundle a/(b‐c) $8,000,000

Income Approach Valuation of Patents/Technology Bundle

© CONSOR 2013

Valuation of Trademark/Brand Asset Bundle

• Method: Relief from royalty approach• Explanation: In the relief from royalty approach a hypothetical 

situation is created to estimate what a business would pay to license its own intellectual property assets in an arms‐length transaction.  The value is then calculated as the present value of the avoided hypothetical royalty charges. In this case approximately 10% of the company’s revenues are sold under a well known brand name. 

31

Revenue $8,200,000Royalty Rate 7%Hypothetical Royalty Earnings a $574,000Discount Rate b 20%Growth Rate c 5%Total Value of Trademark/Brand Bundle a/(b‐c) $3,826,667

Relief From Royalty Approach Valuation of Trademark/Brand Bundle

© CONSOR 2013

Valuation of Software/IT Bundle

• Method: Cost Approach• Explanation: The cost approach represents the work that would 

be necessary to reproduce the software, source code, and other IT assets including all of the modifications, patches, and discarded code as well as corresponding legal fees.

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Employees Hourly Salary Labor Hours TotalSenior Programmers 70 13,500 $945,000Junior Programers 45 17,500 $787,500Engineers 60 2,500 $150,000Legal 200 195 $39,000Total Value of Software/IT Bundle $1,921,500

Cost Approach Valuation of Software/IT Bundle

© CONSOR 2013

Valuation of Online Bundle• Method: Market approach• Explanation: The market approach values Intellectual property by 

comparing the subject asset, to publicly available transactions involving similar assets with similar uses.  This provides a reasonable indication of value if an active market exists that can provide examples of recent arm’s‐length transactions, with adequate information regarding terms and conditions. 

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Number of Identified Comparable Market Transaction 551st Quartile $250,000Median $1,200,000Mean $1,750,0003rd Quartile $3,400,000

Market Approach Valuation of Online Bundle

© CONSOR 2013

Valuation Summary of ABC Company’s IP Bundles

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IP Bundle Valuation Methodology ValuePatents/Technology Bundle Income Approach $8,000,000Trademark/Brand Bundle Relief From Royalty $3,826,667Software/IT Bundle Cost Approach $1,921,500Online Bundle Market Approach $1,200,000Total Value of IP Bundles $14,948,167

Valuation Summary of ABC Company's IP Bundles

© CONSOR 2013

Valuation Conclusion

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Present Value of Expected Future

Benefit

Valu

e of

Bus

ines

s

=

Tangible Assets

Intangible Assets

= =

Tangible Assets

Online Bundle

Trademark/Brand Bundle

Software/IT Bundle

Patents/Technology

The value of technology company ABC is more than just the value of their patents. It is equal to the value of their tangible assets plus the value of their IP Bundles.

Key Conclusion

© CONSOR 2013

Valuation of the National Lampoon™ Brand IP

36

• CONSOR Intellectual Asset Management (“CONSOR”) was retained to analyze and value specific intellectual property assets owned by National Lampoon, Inc. (“NLI”)

• The specific intellectual assets being valued are the trademark, National Lampoon™, and affiliated domain names (together, the “Brand IP”)

• Analysis based on the Brand IP’s current use, as owned by NLI• Analysis performed as of May 30th 2012

Assignment Overview

© CONSOR 2013

Background

37

Brand IP

• National Lampoon™

• Those registered website domain names that include the term “nationallampoon”

• Does not include the Media Library, or website domains that do not use the term “nationallampoon”

Media Library

• 11 motion pictures produced or acquired by NLI

• The Media Library does not include 31 National Lampoon branded titles, including:

o Animal Houseo The Vacation serieso Van Wilder

Website Network (“NLN”)

• Network of over 200 affiliated websites targeting the college and young adult markets

• Includes over 60 websites acquired or launched by NLI, including:

o NationalLampoon.como DrunkUniversity.como TOGATV.como KnuckleHeadVideo.com

• NLI’s business activities include: Monetization of the National Lampoon trademark; a network of websites (NLN); and, a media library

• NLI pays Harvard Lampoon 2% of revenues for the right to use of the term “Lampoon”

© CONSOR 2013

Valuation Approaches for Brand IP

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Method Description Relevance for Analysis

Cost Approach

Amount a potential buyer would pay to replace or create an asset themself

Not Used in this Analysis:As the Brand IP has been used for  many decades, not feasible to recreate the asset in a reasonable timeframe 

Income Approach

Present value of future economic benefits received from ownership of an asset

Applied in this Analysis:Normalized income related to licensing use and monetization of the Brand IP

Market Approach

Value based on observed transactions involving comparable or similar assets

Not Used in this Analysis:Unable to identify transactions involving acquisition of comparable assets

Relief from Royalty Approach

Present value of expected royalty compensation from observed licensing transactions involving comparable or similar assets

Applied in this Analysis:  Analyzed comparable asset licensing royalty rates, applied to NLI’s reported revenues

© CONSOR 2013

Financial Results

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• Most recent financial statement is for FY July 2008: NLI may no longer operate as a going concern

• Other Revenue includes: production, advertising, publishing, distribution and tours

• Net Loss reported for each of the periods reviewed; SG&A expense often exceeded total revenue 

• Licensing revenue fluctuated year to year, driven by non‐recurring transactions

• Cost of Licensing Revenue not defined in financial reports, exceeds the 2% royalty owed to Harvard

Our analysis isolated and normalized licensing revenues and expenses related to management and licensing of the Brand IP

NLI Summary Income Statement Common Size, % of Total RevenueFor the fiscal year ended July 31:� 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008

RevenueLicensing Revenue 904,244         940,661        1,981,814     931,738        3,952,847    3,699,444    90% 49% 54% 25% 65% 50%Other Revenue 103,640         980,903        1,691,628     2,755,956     2,146,218    3,738,540    10% 51% 46% 75% 35% 50%

Total Revenue 1,007,884      1,921,564    3,673,442     3,687,694     6,099,065    7,437,984    100% 100% 100% 100% 100% 100%

ExpensesSG&A 4,159,094      4,285,858    5,096,414     5,303,877     5,837,705    5,447,594    413% 223% 139% 144% 96% 73%Cost of Licensing Revenue 285,174         421,801        517,745        231,386        155,842        77,858          28% 22% 14% 6% 3% 1%All Other Expenses 2,486,028      2,338,155    6,719,315     5,011,516     2,609,688    3,599,506    247% 122% 183% 136% 43% 48%

Total Expenses 6,930,296      7,045,814    12,333,474  10,546,779  8,603,235    9,124,958    688% 367% 336% 286% 141% 123%

Provision for Taxes 2,424              2,857            9,138             ‐                 ‐                 ‐                 0% 0% 0% 0% 0% 0%

Net Income (Loss) (5,924,836)    (5,127,107)  (8,669,170)   (6,859,085)   (2,504,170)  (1,686,974)  ‐588% ‐267% ‐236% ‐186% ‐41% ‐23%

Source: NLI's form 10‐K for 2003‐2008

© CONSOR 2013

Normalized Licensing Revenue

40

• NLI’s Licensing Revenue fluctuated year to year

• Based on information available, removed non‐recurring revenues in order to estimate future, normal revenue from use of the Brand IP

Recurring annual Licensing Revenue estimated at $1 million

Normal Licensing Revenue CalculationFiscal Year Ended 7/31 2003 2004 2005 2006 2007 2008

Licensing Revenue as Reported 904,244            940,661         1,981,814         931,738         3,952,847         3,699,444        

Adjustments ‐                     ‐                  (950,000)           ‐                  (2,902,295)       (2,384,172)      After Adjustment, Normalized Licensing Revenue 904,244            940,661         1,031,814         931,738         1,050,552         1,315,272        

Average 1,029,047    Median 986,238        

Adjustments to Licensing Revenue2005

2007

2008

Removed settlements with Universal Studios:  $2.24 million for unpaid royalties; and $662,295 related to video royalty revenue (2008 10‐K, page 26)

Removed sale of international distribution licenses in 2008 for $1,492,196, and sale of a library asset to Comedy Central for $891,976 (2008 10‐K, page 26)

Removed $400,000 advance on video royalties from Genius Products and $100,000 from Creative Tours for the video game rights to the NL brand name with no corresponding payment in 2006.   Also removed $200,000 licensing fees related to video release of "Dorm Daze", and approximately $250,000 in royalties on older titles.  (2006 10‐K, page 19)

© CONSOR 2013

Reasonable Expenses

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• At NLI, SG&A expense exceeded reported revenues for several periods

• Normal earnings from the Brand IP based on industry‐based SG&A expense ratios

Applied an SG&A ratio of 40% of revenue to calculated normal earnings for the Brand IP

Reviewed the SG&A expense ratios for comparable industries to determine level of earnings a going concern would expect to achieve from the Brand IP

Reviewed SG&A ratios for 12 of the largest publicly traded North American companies in the Movie and

Entertainment Industry.

Also reviewed SG&A ratios of 15 of the largest publicly traded North American companies in the Apparel,

Accessories, and Luxury Goods Industry, as a significant portion of these firms’ revenues derive from

the management of brand IP.

Movies and Entertainment Industry  

Measure SG&A RatioMedian  19.6%

1st Quartile  17.6%

3rd Quartile  23.6%

Average  22.3%Ratios for 12 publicly traded North American companies with market capitalizations over $1 billion

Measure SG&A RatioMedian  35.9%

1st Quartile  28.4%

3rd Quartile  40.1%

Average  34.3%

Brand Owning Companies in the Apparel, Accessories, and Luxury Goods Industry

Ratios for 15 publicly traded North American companies with market capitalizations of over $1 billion

© CONSOR 2013

Licensing Activity Earnings

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• Applied industry based SG&A Ratio to the calculated Normalized Licensing Revenue:  resulting expense is equivalent to personnel costs for a 1‐2 person brand management & licensing department

• Applied the 2% contractual royalty due to Harvard Lampoon on any licensing activity

Normal annual earnings estimated at approximately $375,000

Calculation of earnings from licensing activity represents the earnings that could be achieved if the Brand IP were managed outside the cost structure of NLI

Earnings from Licensing ActivityFiscal Year Ended 7/31 2003 2004 2005 2006 2007 2008

Adjusted Licensing Revenue 904,244       940,661  1,031,814  931,738  1,050,552  1,315,272 

Applied SG&A Ratio 40% 40% 40% 40% 40% 40%Licensing Activity Expenses 361,698       376,264  412,726     372,695  420,221     526,109    

Harvard Lampoon Royalty  2% 2% 2% 2% 2% 2%Harvard Lampoon Royalty Expense 18,085         18,813    20,636       18,635    21,011       26,305      

Pre‐tax Earnings 524,462       545,583  598,452     540,408  609,320     762,858    Estimated Tax Rate 35% 35% 35% 35% 35% 35%

After‐tax Earnings for Brand IP 340,900       354,629  388,994     351,265  396,058     495,858    

Average 387,951 Median 371,812 

© CONSOR 2013

Discount Rate & Royalty Rate

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For Valuation Analysis:• 30% Discount Rate• 5% Royalty Rate

Discount Rate Benchmarks Royalty Rate BenchmarksBenchmark Discount Rates, As of May 30, 2012Indicator Rate (%) Source1-year Treas 0.20 bvresources.com

20 Year T-bond 2.44 bvresources.com

30 Year T-Bond 2.97 forecast.org

Mortgage 30 Year 3.91 federalreserve.gov

Moody's Aaa 3.76 bvresources.com

Moody's Baa 5.12 bvresources.com

Senior Lenders 6 PCOC, Summer 2011

Asset-backed Lenders 16 PCOC, Summer 2011

Mezzanine Funds 20.5 PCOC, Summer 2011

Private Equity Groups 30 PCOC, Summer 2011

Venture Capital Funds 40 PCOC, Summer 2011

Royalty Rates for Comparable Brand AssetsSource Rate

4.0%

5.0%

8.5%

10.0%

4.0%

8.5%

10.0%

10.0%

Licensing Royalty Rates; 2012 Edition

5.0% ‐ 9.0%

The Licensing Letter, 2011 6% ‐ 20%

NLI's Agreements 2.0%

5.0%

7.0% ‐ 10.0%

Royalty paid to The Harvard Lampoon for use of the term "Lampoon" 

Corporate use of a trademark for "Motion Picture Films"

3rd Quarti le Rate

Notes

RoyaltyStat® Compiled Entertainment & Media 

Royalty rates for 2751 trademark l icense agreements in the RoyaltyStat database

RoyaltyStat® Compiled Trademarks

Royalty rates for 457 Entertainment & Media l icense agreements  in the RoyaltyStat database

Royalty paid by Warner Brothers on gross  receipts  after production costs, for producing a theatrical  production using the term "National  Lampoon"

Royalty paid by Warner Brothers on merchandise using the term "National  Lampoon"

1st Quarti le rate

Median rate

Average rate

3rd Quarti le Rate

1st Quarti le rate

Median rate

Average rate

Royalty rates for Entertainment/Character‐Based l icensed merchandise. At the higher end of the range are well  known properties  l icensed by entities  such as  Disney and Marvel  

© CONSOR 2013

Value of the Brand IP

44

Calculated value of the Brand IP as used by NLI: $1.1 million

Income Approach

Normal Brand IP Earnings a 375,000

Discount Rate b 30% Slide 11

Growth Rate c 0%

Value of Brand IP a / (b‐c) 1,250,000

Relief from Royalty Approach

Revenue a 6,000,000

Royalty Rate b 5.0%

Normal Brand IP Earnings c 300,000Discount Rate d 30% Slide 11

Growth Rate e 0%

Value of Brand IP c / (d‐e) 1,000,000

As above

Stagnant use of Brand IP, no indication of growth since 2008

Slide 11

Slide 10

All revenues of NLI

a x b

© CONSOR 2013

Conclusion

45

• IP Valuation is both Art and Science

• The valuation context key

• Multiple approaches can be used to determine value

• Intellectual properties can hold substantial value

• Various monetization opportunities exist

© CONSOR 201346

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