Tag Archives: CPA Global

Rich values for IP services providers defy investor expectations

Prices for companies that support and sell IP services and analytical software remain surprisingly strong, even as patent licensing and sales continue to decline.

Their success appears to be fueled by the very problems facing patents: lower values and lack of certainty.

IP tools providers are the proverbial sellers of picks and shovels; the “miners” take the primary risk. Most are satisfied with the steady cash flow, while their clients make the big bets in R&D and litigation. Uncertainty makes investing even more dangerous and the information premium more valuable.

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For the full IP services deal story, “Defying the monestisation market” in the September IAM magazinego here. In this issue the Intangible Investor explores recent IP service firms transactions and their prices.
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Examples of IP services successes include CPA Global’s 2017 acquisition by private equity firm Leonard Green & Partner’s for 2.4 billion pounds ($3.1B USD). Cinven had acquired the firm in 2012 from Intermediate Capital Group for around £950 million ($1.3 billion), backed
by $555 million of debt financing.

In 2015, CPA Global – with approximately $12 million in revenues and no profit – acquired Innography for an undisclosed amount. An industry-insider told IP CloseUp it was likely between $80 and $90 million, or about seven times revenue. Innography, with a strong reputation, had raised $14 million in venture capital.

AI Driven

Thomson Reuters sold its IP and Science business in 2016 to Onex and Baring and Private Equity Asia for $3.55 billion. The company is now Clarivate Analytics.

Among the newer and more interesting entries in the IP services space is ClearAccessIP, a Palo Alto, CA-based firm “that indexes patents, looks for vulnerabilities in a corporation’s patent strategy, and finds opportunities in a patent collection for further value.”

Founded by Nicole Shanahan, a young patent attorney who served as a researcher for IP scholar Colleen Chien at Santa Clara University College of Law. Professor Chien is a member of the Clear Access IP Advisory Board, along with former AIPLA president Wayne Sobon.

“I am essentially trying to build and democratize a marketplace platform because not all patent holders and sellers can afford the large transaction firms,” she says. “I’m also solving a very old problem and putting docket management in the cloud.”

An extensive interview with Shanahan appears in Software Engineering Daily. The audio can be found here; the written transcript, here.

Ms. Shanahan, it seems fair to inform readers, has been living with Sergey Brin, founder of Google and President of its parent company, Alphabet, Inc., which, historically, has been dubious about strong patents.

New Wave

IP services and software providers, especially those using the latest algorithms, may represent a new wave for beleaguered IP holders and their law firms seeking to manage patent risk. The computing strength and analytics capability they offer may be just what some IP holders and margin-conscious law firms need to compete, or these companies may simply be repackaging the outsourcing mantra for the AI age.

These relationship-driven, technology-focused service providers are likely to grow in value as global patent applications and portfolios increase and uncertainty lingers. An improved outlook for patent licensing will make them even more attractive.

Image source: softwareengineeringdaily.com; clarivate.com; cpaglobal.com 

The UK Drives IP Services

The British are Here!

The UK holds a unique position in intellectual property world, especially publishing and services. At least several of the top IP publications are British or British-owned. IAM(IP Media Group), Managing Intellectual Property (Euromoney Institutional Investor), IP Review (CPA Global), World IP Review (Newton Media) and Intellectual Property Magazine (Informa).

IP Law & Business, recently folded into Corporate Counsel, is owned by American Lawyer Media, which was acquired two years ago by British media and private equity firms and is now under the direction of the Royal Bank of Scotland (RBS). Jeremy Phillips’ seven plus blogs,IPKat and IP Finance among them, also originate in England. (Jeremy, BTW, founded MIP.) 

Additionally, the leading IP brokerage and transactions firm, ICAP OT, trades on the FITSE, and CPA Global, the leading IP renewals and administrative business, recently acquired in a management buy-out that valued it at $1.5b (USD), is located in Jersey (not New Joisey!). Anaqua, the top IAM software company that recently acquired SGA2, a French renewals business, was originally established in London and still has a key office there. There are other examples too numerous to cite.

English may be better equipped to observe and compute the world IP scene more effectively than Americans, who for the most part enjoy the best protections and reap the largest returns. The Brits are making it clear that there are many ways for many nations to participate in lucrative market for owning and understanding intellectual assets and the services that are required to maintain them.

In the 19th century gold miners relied on a variety of businesses to sell them picks, shovels and maps. In the early 20th century oil speculators needed drilling rigs and geological surveys. Digging for new ideas can be as daunting as mining for ore or drilling for crude.

Innovators and innovation managers need all of the help they can get. Apparently they are getting a lot of it from UK providers.

Illustration: EMI Canada

IP Services Buyout

Acquistion Values CPA Global at $1.5B

A majority stake in CPA Global, one of the largest patent and legal services companies, was recently acquired by a buyout group led by Intermediate Capital Group PLC (ICP.LN). 

According to Dow Jones in London and the Financial Times, details of the transaction weren’t disclosed but a person close to the deal said the enterprise value of the deal was around GBP470 million and ICG is taking a 47% stake for that. Management will hold 22% and the balance will be held by the company’s current 300 or so shareholders, most of whom are partners at the law firms that founded the business.

The way I read this is that ICG’s 47% stake is worth about $734 million (USD) and the entire company’s value is approximately GBP950 or just under $1.5 billion (USD). Not a bad valuation for an effectively low-tech IP services business.

CPA’s crown jewels, as I understand them, are its IP renewals business. With scores of patent and trademark holders’ maintenance fees paid through CPA there is a significant “float,” which much like a bank or other financial institution CPA is able to monetize. At current, historically low interest rates CPA Global’s renewals business is an excellent buy. With even modest inflation, which most observers feel is inevitable, in a few years CPA is likely to be worth a hearty multiple of what ICG paid for it. Cheers.


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