Situation
A woman was settling the estate of her late husband and in the process was referred to Merrimack Business Appraisers and Lou Pereira as a business valuation was needed to value a portion of the estate.
Merrimack Business Appraisers’ Approach
The situation was unique in that the spouse who had passed away had in place with his employer, a college, multiple contracts giving him the full rights to three textbooks he had written and four online courses he had developed and taught. Each book and course represented an intellectual property rights contract that need to be valued as part of valuation of the estate.
When he passed, the school wanted to continue to offer the courses, but per the contracts they did not have the rights of ownership. They needed to buy out the estate.
While Pereira has prepared hundreds if not thousands of business valuations in his career, this was a unique situation. There were multiple factors to account for in developing the valuation of the estate’s assets (the textbooks and courses) including capturing past enrollment in the courses and projecting future enrollment. Pereira had to take into account that the popularity of the courses would be affected over time by the author no longer being able to deliver the courses and the courses becoming less relevant over time.
Valuation Outcome
The business valuation of each of the intellectual property rights contracts was completed, enabling the college to buy out the estate and gain ownership, and have the right to offer the materials.
