Background
A large educational software company undergoing an internal reorganization of its intellectual property (IP) holdings needed to reassess how its IP assets were valued and licensed across its various entities. The company’s structure included an IP holding entity and multiple operating companies, each relying on proprietary software and related technologies. This reorganization required a robust framework for determining fair royalty rates and balancing intercompany payments for services such as research and development.
Engagement
Ocean Tomo, a part of J.S. Held, was retained to support the client in evaluating IP asset values and the implications of key ownership and licensing factors. Our team was tasked with determining appropriate royalty rates for IP transferred between entities and ensuring these rates reflected both market comparables and the long-term value contribution of the assets to the business. We conducted a detailed analysis of third-party software license agreements, focusing on those with similar perpetual ownership terms and compensation structures. This benchmarking ensured that the royalty rates accounted for the licensor’s ongoing investment in research and development.
Results
Ocean Tomo delivered a comprehensive valuation and royalty framework that aligned with industry standards and the client’s internal financial and legal structures. Our work enabled the client to establish defensible inter-company licensing terms, ensuring compliance and financial transparency across its reorganized entities. The result was a more efficient and equitable IP licensing model that supported the company’s strategic goals and operational needs.
