Proprietary IP

Owned processes, software, or brands a competitor cannot copy.

Family: Multiple
Position: E4
Scored: Against a target

2:14

Whiteboard session

Nick on proprietary IP

Nick works through proprietary IP: why most owners have more of it than they think, how a buyer reads it as a moat, and two painting companies that show the difference.

In this session

01The way inAsk owners about intellectual property and most say they do not have any, because they are thinking of patents. In a company this size a patent may not make sense. IP goes further: trademarks, licensing agreements, technology built for your own processes and systems, a database only you can reach, a training system that sets you apart. Plenty of companies have it and have never called it IP.
02What a buyer is askingHow wide is the moat? How defensible is this business, and how easily could a competitor, or a buyer who picks up a similar company, replicate it? The wider the moat, the higher the valuation.
03How it is measuredIt is part of the FNDRS valuation and the exit elements assessment: questions about your processes, your procedures, and whatever makes you unique, your unique selling proposition. The work is to find that moat, name it, and deepen it.
04Two painting companiesSame trade, same size, same revenue. One has thought through its intellectual property: a training system of its own, and a database that wins customers for less than its competitors pay, guarded closely, with the process trademarked. That one earns the higher valuation, because the buyer gets something defensible to scale from.

Nick LongCEO and co-founder

Table 1. Entry 15 in the Exit Elements specification, version 1.4.
Symbol	Ip	Number	15	Family	Ip Multiple	Position	E4
Scored as	Against a target	Compounds	None	Worked in	Scale	Pillar	Growth potential

§1 Definition

What proprietary ip is

Owned processes, software, or brands a competitor cannot copy.

Proprietary IP is anything you own that a competitor cannot copy: patents, trademarks, proprietary software, unique data, formulas, or documented methods that produce better results. It is what lets a buyer believe your advantage will continue after you are gone.

IP in this range is rarely a patent. It is more often a custom estimating tool, a proprietary training curriculum, a database of installed equipment, or a branded process customers ask for by name.

Use cases

Registering trademarks on your brand and methods, documenting the internal tools and processes that give you an edge, and making sure the company, not the owner personally, holds the ownership.

The multiple family

Qualities that raise the price a buyer will pay for each dollar of earnings. Multiple elements are where most of the value gap closes.

The multiple. What raises the multiple: clean books, predictability, management depth, a sales engine, proprietary IP, brand, and strategic fit.

Meet the family

§2 Measurement

What the assay measures

Registered IP, proprietary software or data, and documented processes that produce a measurable margin or win-rate advantage.

Critical gapLeaking valueDevelopingStrong31Today100Target

Critical gap: 0 to 24
Leaking value: 25 to 49
Developing: 50 to 74
Strong: 75 to 100

Figure 1. Sample assay for Acme Industrial: proprietary ip scores 52 today (developing) against a target of 64 (developing). Sample scores, not a client. Your own assay comes from the exit score and the valuation.

How the scale reads

Every element is scored from 0 to 100 against what a sophisticated buyer expects at close.
Risk elements are scored as control: higher is safer.
Inputs are recorded, not targeted.
Outcomes are derived from their feeding families.

Figure 2. Reaction pathway for Ip: element, family, outcome. The multiple family sets the multiple.

§3 Pathway

The path from proprietary ip to enterprise value

Every element feeds a family, and every family feeds an outcome. The chain below is the route this element's score takes into the number a buyer pays.

Tm Tl Cp Dm Pr Gm Rv Oe Rr Rt Cf Pd Md Se Ip Br Ta Sy Od Dd Cc Kp Lc Td Sp Ac Dr Sc Tx Es In Ap Ev Op Fr Lg

Figure 3. Proprietary IP at E4 in the standard table: column E, row 4. Columns group the families; the wealth series runs beneath.

§4 Position

The multiple series

8 elements share the family. Read them together: a buyer prices them as a group.

§5 Compounds

Proprietary IP stands alone

This element is not part of a named compound. It is priced on its own, through the family it belongs to.

§6 In the FNDRS journey

Where proprietary ip gets worked

The assay scores it. The process, the pillars, and the platform move it. Table 2 lists every place this element is on the agenda.

Table 2. Where element 15 appears in the FNDRS journey.
Where	What happens	Alongside	Go
StageScale	Scale with intention. Grow revenue, profit, capacity, and capability without adding fragility or owner dependence. The earnings engine and the multiple, worked in order of dollar impact.	Pr Gm Rv Oe Rr Rt Md Se Br Ta Sp	The process
Pillar of valueGrowth potential	Not a hockey stick, a plan with evidence. Buyers pay for growth they can underwrite: a market with room, pricing that holds, and a motion that does not depend on the owner closing every deal.	Rv Dm Pr Ta Br Sy	The pillar
trackTechnology audit	The whole footprint and topology, mapped	Td Dd
trackTechnology overhaul	A plan for custom software, AI automation, and integrations	Ta Td Oe
trackApplication stack and code footprint	Advice on a stack that speeds up building and refining software	Br

Figure 4. Proprietary IP against the neutral pivot (Acme Industrial sample): above 50 adds premium to the market base multiple, below 50 subtracts. The hollow mark is the target.

§7 In the valuation

What the FNDRS valuation reads for proprietary ip

Measured Medium leverage

The FNDRS valuation reads this element directly. Its assay score derives from the same answers the engine scores, so the assay and the valuation can never disagree.

What FNDRS reads

How easily the business could be replicated, and the intellectual property it holds.

How the table meets the number

Find out where your proprietary ip stands

The exit score is the first assay: fifteen minutes, six pillars, and a first read on the elements that matter most.

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