Alain Closier
Jan 10, 2025
Q: What are the challenges in Valuing Inventions, Intellectual Property, Formulas, and Other Intangibles?
Monthly Commentary
Q&A with Alain Closier
Alain Closier,
Senior Advisor
Paris, France, Europe
Question:
What are the challenges in Valuing Inventions, Intellectual Property, Formulas, and Other Intangibles?
Answer:
Valuing innovations and intellectual property (IP) is complex due to several factors:
Lasting Impact and Societal Transformation: Major inventions, like the steam engine or the internet, have long-term, sometimes permanent, impacts on economies and societies. These changes shape industries but may eventually be replaced by new technologies.
Gradual Adoption: Even when the potential of innovations is clear, their widespread use takes time. Factors like technological development, cost reduction, and shifts in consumer behavior contribute to this delay.
Unpredictability and Emergence: Some innovations, like the internet, emerge unexpectedly, while others, like autonomous vehicles, take longer to materialize despite being anticipated.
Uncertainty and Sector Crises: Technological advancements can create uncertainty and lead to crises in affected sectors, such as the various crises linked to the internet.
Current Innovation Landscape: Innovation is accelerating in fields like AI, biotech, and robotics, and globalization speeds up the diffusion of new technologies. However, the timing of breakthroughs remains unpredictable, leading to:
High volatility and risks for investors and businesses.
Unprecedented opportunities for market leaders.
Increased market concentration, with major players like Google and Amazon dominating.
Mitigating Risks and Maximizing Opportunities: To navigate these challenges:
Evaluate Innovations Effectively:
Is the innovation significant?
Is now the right time to invest?
Is there a market?
Can the company succeed?
Is competition manageable?
Avoid Underestimating True Winners: Successful innovators can achieve higher valuations than ever before.
Timing and Competition:
First-to-market: Entering too early can lead to failure (e.g., Palm, Blackberry), but early market entry can also bring success (e.g., Google, Facebook). Finding the right timing is difficult but crucial.
Competition: A lack of competition might indicate an immature market, while strong competition requires significant investment to succeed. European companies, in particular, may struggle to compete with U.S. and Chinese giants due to resource limitations.
The core challenge is balancing innovation timing and competition, making valuation and investment decisions highly complex.
About Sanli Pastore & Hill
With four locations in the states and three abroad, Sanli Pastore & Hill is staffed with seasoned providers of business valuations for merger and acquisition advisory services and for shareholder buy-outs, transaction advisory services, financial opinions, and fairness and solvency opinions. Our litigation support and expert witness testimony for economic and financial issues, valuations, opinions and damage calculations covers a wide span of complex issues such as estate planning, shareholder disputes, and marital dissolutions.
Alain Closier, Senior Advisor
Paris, France, Europe
Alain Closier is a former member of the General Management Committee of the Société Générale group. With more than 35 years of experience in international banking and finance, he is, and has always been, passionate about creating innovative activities.
Alain Closier is a graduate of the National School of Statistics and Economic Administration (ENSAE) and holds a post-graduate degree in Economics from Panthéon-Sorbonne University, in Paris. He began his career as an economist, before joining the International Treasury department of Société Générale.
In the 90s, Alain was responsible for the international development of FIMAT. Originally only a French brokerage company, FIMAT has become in just a few years an international leader specializing in brokerage on derivative stock markets with a presence in more than 25 countries.
Alain Closier was also the creator of FIMATEX, a precursor of online brokers. In 2000, FIMATEX was one of the largest IPOs in Paris in the internet sector. After several mergers and acquisitions, FIMATEX became Boursorama, today one of the French leaders in online banking.
Alain Closier's work has been rewarded on several occasions by international financial institutions. As Director of Société Générale Securities Services (SGSS), he was elected “European Personality of the Year in Asset Servicing” in 2010 by Funds Europe magazine. Its teams were recognized both for their expertise in emerging markets and for their presence on a European scale.
Overseeing the development of the bank's venture capital activities in Silicon Valley during the 2000s, Alain Closier acquired in-depth knowledge of the problems encountered by start-ups, both in the United States and in Europe.
If you would like to submit a question for Alain Closier, email us at info@sphvalue.com.