How securing business Rights drives value, fast

Having the right rights enhances your business value. Often, intellectual property forms the focus. However, this is a type of right you build and protect yourself. Today we’re looking at external forms of rights, from exclusive licences to options and access to future cash flows. 

Externally acquired rights that secure your access to assets, cash or opportunities give you leverage in the market – with a lower entrance fee. They also form a category of intangible assets which we call – you guessed it – Rights.

So, what form do Rights take? What might a portfolio of Rights look like? And how can Rights can make your strategy more secure and your business more valuable, fast?

The link between Rights and valuation

Rights like leases, customer contracts, licences and options can provide long-term stability for your business model. They smooth out the ups and downs in revenue streams and offer protection against competitive market entrants. Many Rights are a fast route to value. So it’s important to secure the right set of Rights.

Rights entail both the asset and the protection of that asset simultaneously. Rights to future cashflows are the contractual promises customers make to pay you in the future for a good or service. These promises flow directly to your bottom line. Because you know what cash value they should bring and when to expect that cash, rights to future cashflows are easier to value than many other forms of intangible assets. Live customer contracts and contracted revenue will raise your business’ value, whether you’re looking to borrow or raise money or exit. Other Rights like leases and licences are proof of a protectable competitive position. They improve the likelihood of your business securing revenue compared to your competitors who don’t have that right. 

Your Rights – your entitlement to use, borrow or bid for externally owned assets – are usually contractual. This legal protection makes Rights unique: most intangible assets don’t have this high level of protection. Being able to defend your Rights in a court of law is powerful. It makes Rights instantly valuable to your business and attractive to buyers, lenders and investors.

Four ways that Rights drive business benefit

When properly secured, rights can offer four strategic advantages to your business. These advantages make your business more attractive to potential investors, partners or buyers.

1. Competitive advantage. Exclusive rights and licenses to access other businesses' assets gives your business a unique selling proposition and sets you apart from competitors. These kinds of Rights can also stop others from accessing or utilising valuable resources, technologies or markets, giving you a crucial advantage.
2. Revenue generation. Securing rights to future cash flows can create additional revenue streams for your business. These include subscription-based revenue, royalty and licensing agreements, long-term service contracts or revenue-sharing partnerships. They provide a steady and predictable income stream, increasing the overall value of your business.
3. Stability and longevity. Rights that extend for many years or even decades secure the resources required for your core business operations. Securing the right to long-term service contracts or revenue-sharing partnerships can make revenue visible and stable, and in turn make your business more attractive to investors and buyers.
4. Strategic flexibility. Options and rights to future cash flows can offer flexibility in business decisions at a lower cost than buying the full asset. For example, if you secure options to access externally owned business assets at a predetermined price, you can reserve a seat at the table for key resources. This enables you to tap into new opportunities when the time is right.

So, how do you go about building a strong portfolio of Rights that drives value for your business, today and tomorrow? Glad you asked.

Discover how to build a stellar portfolio of Rights for your business now.