UK companies undervalued

And finance directors in the UK are ten years behind the US in realising the value of the intellectual property in their company’ accounts, according to leading US consultancy InteCap.

InteCap managing director Howard Cottrell said: ‘Companies don’t realise what they have.’ His company believes that with proper ‘mining’ of a company’s IP, its asset value could increase by an average of about 35%.

According to the World Intellectual Property Organisation based in Geneva, small and medium-sized businesses’ innovative and creative capacity ‘is not always being fully exploited.’ It said: ‘Many SMEs are not aware of the intellectual property system or the protection it can provide for their inventions, brands, and designs.’

Cottrell cites a case in which a US company had bought a UK company whose IP had been valued at a couple of thousand pounds by UK accountants. When InteCap re-examined the acquisition, consultants found the UK company’s IP to be worth £6m.

He explained: ‘The UK company lost out because the IP wasn’t accounted for properly. There was technology involved that could be used by other companies.’

Very often, he added, ‘mining’ a company’s IP involved going through hundreds of forgotten patents and seeing if they had been used by other companies. If so, the company could make a claim on its patent and receive a return on it.

The businesses with the largest amount of IP are pharmaceutical companies, which can have thousands of patents on drugs. Other ways of accounting for IP are in trademarks, like brands, and copyrights, like music.

According to Cottrell, the government both in Europe and the UK has not recognised IP enough.

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