I’m a regular listener to the excellent Planet Money podcast by a team over at NPR that makes economics fun and engaging (or rather more fun and engaging).
A vertically integrated distressed private equity firm with robust in-house operational turnaround expertise
Basically they are a $7 billion PE outfit that specialises in companies about to go bankrupt. The Planet Money team followed Lynn and one of her investments, catalog company Spiegel and listened to their experience about being rescued through private equity money.
It was down to the wire for Spiegel for getting the investment from Patriarch to save the company. The managing director was already at the stage of talking to their bank’s liquidators about selling the rest of Spiegel’s merchandise of clothes and accessories and closing things down.
To hear Speigel tell it in the story, it very much seems the bank’s only focus was on selling the remaining merchandise and not on the Spiegel brand or its other intangible assets, such as its long customer relationships and sales database or its e-commerce platform.
From an IP perspective, ignoring the intangible assets misses a HUGE likely chunk of the value of a company. For most companies these days, the largest part of their value will be their intangible and IP assets. It very much seems like Lynn and Patriarch saw the value of Spiegel’s IP assets where the bank did not and snapped up quite a deal.
The sad thing is that from what we hear, many times in bankruptcy or insolvency the true value of the IP gets lost and the focus goes back to calculations around the bricks and mortar physical assets.
Definitely worth a listen.