ECONOMICS VALUATION STRATEGYwww.intecap.com

Financial Opportunities in ConsultingIndiana UniversityProfessional Opportunities Orientation ProgramSeptember 19, 2000

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Introduction to financial consulting

Who are financial consultants? What do financial consultants offer their

clients? In what types of projects are financial

consultants engaged? What is a typical day in the life of a financial

consultant? Self-Assessment Financial consulting as a career platform

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Financial ServicesFinancial Services

Litigation SupportLitigation Support

Investment Consulting ServicesInvestment Consulting Services

Intellectual Asset ManagementIntellectual Asset Management

Who are financial consultants?

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Introduction to InteCap

Provide economics, valuation, and strategy consulting services

Ten offices with approximately 200 professionals with backgrounds in accounting, finance, and economics

First consulting firm in the United States to launch an integrated practice dedicated to helping companies manage and extract value from their intellectual property

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What do financial consultants offer their clients?

Specialized expertise Outsourcing/Resources Fresh perspective Objective third party opinion Quick turn-around Focused attention Structured solutions to unstructured problems The “Why” behind the numbers

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ValuationValuation

StrategyStrategy

EconomicsEconomics

What the value What the value isis

What the value What the value should have beenshould have been

What the value What the value could becould be

In what types of projects are financial consultants engaged?

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ValuationValuation

StrategyStrategy

EconomicsEconomics

Written Report, Analysis, and PresentationWritten Report, Analysis, and Presentation

Expert Report, Analysis, and TestimonyExpert Report, Analysis, and Testimony

Written Assessment, Recommendation Written Assessment, Recommendation and Implementationand Implementation

What are the results/deliverables of these projects?

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Fact-Finding

INTERVIEWSINTERVIEWS

FINANCIALFINANCIALSTATEMENTSSTATEMENTS

MARKET RESEARCHMARKET RESEARCH

INTERNETINTERNET

Question: Why did our profit margins drop on our premium product?

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Answer: New competitor caused prices to drop, meanwhile production costs have increased

$0

$20

$40

$60

$80

$100

$120

$140

1994 1995 1996 1997 1998 1999

PricesPrices

CostsCosts

PricesPrices

CostsCosts

New Competitor EntersNew Competitor Entersthe Marketthe Market

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Patent Infringement LitigationPatent Infringement Litigation

The PatentThe Patent

What is the economic injuryWhat is the economic injuryto the patent owner?to the patent owner?

Depressed PricesDepressed PricesLost SalesLost Sales Opportunity Cost Opportunity Cost

The InfringersThe InfringersInfringer 1

Infringer 2

Infringer 3

A BetterA BetterMousetrap!Mousetrap!=

Economics Example by InteCap

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Trademark ValuationTrademark Valuation

ValuationExample by InteCap

Retained by a global manufacturer of household Retained by a global manufacturer of household appliances to perform a trademark portfolio valuationappliances to perform a trademark portfolio valuation

Total Enterprise ValueTotal Enterprise Value100%100%

Total Value of IntangiblesTotal Value of Intangibles56%56%

56%56%

Other Intangibles

Value32%

Fair Market Value34%

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Intellectual Property Quality Management (IPQMIntellectual Property Quality Management (IPQM))

Client DilemmaClient DilemmaConsultant Hired to EvaluateConsultant Hired to Evaluate

Strategic OptionStrategic Option

How can we extractHow can we extractvalue from ourvalue from our

non-strategic technology?non-strategic technology?

- - License to OthersLicense to Others

- Sell outright- Sell outright

- - Spin-out as new companySpin-out as new company

- - Donate to a universityDonate to a university

StrategyExample by InteCap

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THERE IS NO TYPICAL DAY!!!THERE IS NO TYPICAL DAY!!!

What is the “typical”day in the life of a financial consultant?

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How about a “typical” week in the life of a financial consultant?

Monday - Create graphical presentations of financial analysis

Tuesday - Travel to NYC for client meeting regarding trademark valuation

Wednesday - Conduct market/industry research and review financial and business records

Thursday - Forecast cash flows and prepare a cost of capital analysis

Friday - Participate in brainstorming discussions, begin quality-control process on analyses, and celebrate Friday with firm at happy hour!

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Self-AssessmentWould you enjoy being a financial consultant?

Unstructured environment?Unstructured environment?

Do you prefer . . .Do you prefer . . .

Other financial careerOther financial career Financial consultantFinancial consultant

Finance only?Finance only?

Concentrate in a single industry?Concentrate in a single industry?

Compartmentalized work?Compartmentalized work?

Corporate culture?Corporate culture?

Finance, marketing, economics, accounting?Finance, marketing, economics, accounting?

Variety of industries?Variety of industries?

Team work?Team work?

Project work?Project work?Functional work?Functional work? Consulting culture?Consulting culture?

Structured environment?Structured environment?

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Consulting as a career platform

Various skills acquired as a financial consultant

CPA, CFA, MBA opportunitiesClient contact and industry exposureFoundation for many other careers

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Consulting: Managing Director, InteCap

Investment Banking: Managing Director, Bear Stearns

Marketing: Brand Manager, Procter & Gamble

Sales: Account Executive, Warner Lambert

Graduate School: MBA - Kellogg, Chicago, UCLA, etc. Law - Michigan, UVA, Wisconsin,etc.

Consulting as a career platformExamples of InteCap Careers

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Financial consultants provideFinancial consultants provide

Clients withClients withexpertise and objectivitycreative solutionsclarity and structure

Consultants withConsultants with use and development of a wide range of skills broad career platform

In Summary...