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Chapter 11 Valuation Demonstrates the Intensity Approach

Intensity was founded on the notion that combining world-class talent with recognized industry best practices produces the highest quality results possible. We proved this once again by producing a critical valuation for a client in Chapter 11 bankruptcy reorganization within a tight one-week deadline.

The case involved a major international airline with highly recognizable trademarks including logos, words, distinctive signs, and websites. When it comes to intangible assets like trademarks and intellectual property, our experts combine mathematical rigor with real-world judgment to value items that do not trade every day on the open market.

Our team huddled at the outset to develop a strategy for fulfilling the assignment within the deadline. We considered the relevance and feasibility of several methods commonly used to value intellectual property, including the cost, market and income approaches. Our analysis quickly revealed that the income approach was best in this specific case because it provides the most reasonable and accurate estimate of the true value of the airline’s distinctive brand markers.

The income approach measures the net present value of expected cash flows from an asset over its useful life. To derive that value for the trademarks in this case, our experts calculated the expected after-tax cash flows attributable to the brand and discounted them to the present at an appropriate interest rate. Given the particular facts of this case, we used the avoided royalty method, calculating the amount the airline would have to pay to license the trademarks and estimating the present value of “savings” the airline enjoyed by owning the brand outright instead of paying someone else to use it.

Pulling together the data, deciding on a valuation approach, and delivering a highly defensible estimate to the court within one week was yet another example of Intensity’s ability to assemble the right resources in a tight timeframe to deliver a world-class result.