Aon's (AON) Solution to Fetch Higher Value for IP Portfolio

AON AJG BRO EHTH

Aon plc (AON - Free Report) recently announced the introduction of Quality of Intellectual Property (QoIP) Solution, which can now be availed in the market. Shares of the company have gained 0.7% on Nov 11.

The solution intends to primarily help companies in assessing the quality of their IP portfolio in the course of M&A or financing transactions. This, in turn, is likely to fetch improved transaction value for the companies’ IP portfolios in the M&A and capital markets.

QoIP functions by generating a report, which classifies the IP portfolio with enhanced accuracy, identifies its contribution to the company’s revenue streams and measures the IP portfolio’s quality against other competitor portfolios.

In fact, the report assists in fetching full value of the IP portfolio, which will enable the companies to position themselves better in the M&A market during sale transactions and financing situations that also comprise venture capital and private equity investments.

Moreover, the new solution has already proved its credibility in the market by assisting Victory Innovations, which utilized the solution while divesting a major stake to The Carlyle Group in September. Management at Victory Innovations emphasized on the usefulness of the report produced by QoIP, which has enhanced its sale process and generated higher value for its shareholders.

Shares of this Zacks Rank #3 (Hold) company have gained 3.3% in a year compared with the industry’s growth of 6%.

Furthermore, the launch of this solution seems to be time opportune since most of the companies that have made substantial investments in the IP are not able to effectively correlate the importance of IP as a component of their enterprise value. As a result, the IP is assigned as a mere confirmatory due diligence item in majority of the transactions and that too at the latter stages of the deal when value and terms have already been agreed upon. This often leads to incorrect valuation of companies during sales and financing transactions.

QoIP definitely comes as a boon for IP-intensive companies and also addresses the dire need for solutions required to realize higher value of the IP portfolio. The reason can be attributed to the fact that intangible assets, under which IP comes, accounts for around 85% of the total asset value in the S&P 500.

Also, this is not the first time that Aon has come up with an IP solution. Last month, it introduced Intellectual Property (IP) Capital Market Solution through which IP assets can be used as collateral in an insurance-enabled debt structure thereby ensuring growth capital.

Apart from rolling out new solutions, we believe the company’s expansions through buyouts and collaborations, divestitures and a solid financial position have positioned it well for long-term growth.

Stocks to Consider

Some better-ranked stocks in the same space include eHealth, Inc. (EHTH - Free Report) , Arthur J. Gallagher & Co. (AJG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

eHealth, Arthur J. Gallagher and Brown & Brown have a trailing four-quarter earnings surprise of 83.27%, 15.79% and 13.91%, on average, respectively.

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