Lee Drucker
As much as the landscape for biotechnology startups has changed over the last decade, one thing that hasn’t changed is this: Intellectual property is the beating heart of a business. But as more parties get involved in funding early-stage development of new technologies, locking down and protecting the rights to intellectual property has also become…
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An in depth article about a fabulous entrepreneur and promising cancer therapy almost derailed by impropriety. This was one of Lake Whillans’ first investments:
http://medcitynews.com/2015/03/entrepreneur-nearly-lost-company-heres-litigation-finance-helped-fight-back/
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About a month ago, I discussed the venture capital landscape, and why litigation funders are attractive partners for VCs and VC-backed companies in need of resources to adequately defend their businesses. A similar, but distinct, phenomenon exists in private equity.
Private equity firms (which invest in a broader class of companies and employ a wider array of value generating techniques than venture capital) share some common characteristics that make litigation finance a useful product within the industry.
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The Delaware Chancery Court handed down a favorable decision on work product protection for funding documents last week. Here are links to an article discussing the decision and the decision itself.
http://www.bloomberg.com/news/articles/2015-03-04/litigation-finance-communications-protected-business-of-law
http://law.justia.com/cases/delaware/court-of-chancery/2015/ca-7841-vcp.html
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At Lake Whillans, I spend most of my time valuing litigation related assets. There are many considerations in this exercise, some of which I wrote about here.
Today, I am going to write about cost of capital, which is a key component in valuation. Aswath Damodaran recently wrote:
“If there were a contest for the most measured number in finance, the winner would be the cost of capital. Corporate finance departments around the world compute it as an integral part of investment analysis. Appraisers estimate it as a step towards estimating intrinsic or discounted cash flow value. Analysts spend disproportionate amounts of their time working on it, though not always for the right reasons or with the right inputs.”
The best way for companies and their counsel to determine if litigation finance is an attractive option is to discuss it with us.
Lee Drucker drucker@lakewhillans.com
