‘Companies missing out on finance because banks are failing to value brands’

The Government is to launch a campaign to raise awareness of the value of brands among bankers after a report found the worth of such intangible assets was not being considered enough when financiers were determining the value of a company. 

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Ministers to raise awareness of intangible assets after IPO report finds knowledge gap among financers.

A report by the Intellectual Property Office (IPO) has found the value of “intangible assets” – the value of a company’s brand based on factors such as perception, trust, awareness and sentiment – grew 10 per cent to £137.5bn between 2009 and 2011. Conversely, the value of tangible assets such as building and machinery fell to £89.8bn.

The IPO argues that despite the growth companies are missing out on investment opportunities because bankers do not understand the worth of intellectual property. It calls on banks to use existing tools to “identify and describe” the assets during the financing process. 

In response, the Government has vowed to run initiatives “to build understanding of IP in businesses and financial services sector through improving bankers’ training”. Ministers will also support a “productive dialogue between sources of finance and IP-rich firms by developing an IP Finance toolkit”.

Minister for intellectual property Lord Younger says:  “These investment figures show the strength and value of the UK’s creative and knowledge-based industries. Continued growth in investment in ‘intangible assets’, along with the fact that nearly half are protected by formal intellectual property rights, demonstrates that some UK firms do understand their real value.

“However despite these positive figures, as the economy grows a real challenge remains for firms to understand their intellectual property and how it can help them to access funding to invest in the first place. The government has set out an action plan, to help address the missed opportunities and help businesses, and the lending community, to realise and maximise intellectual property assets.”

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