economics valuation strategy financial opportunities in consulting indiana university...
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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...