How CFOs Can Unlock Untapped Value: IPv4 Holdings

by IPv4.Global Staff

Chief Financial Officers (CFOs) help organizations maximize their corporate value and enable stakeholders to navigate the financial data obtained from cash flow, asset value, and operational expenses. For CFOs to fully understand their organizations’ capital, they must determine the value of their tangible and intangible assets.

Often, asset valuation tends to focus more on tangible assets, which are typically given preferential treatment by financial markets over their implicitly valued intangible counterparts. However, intangible asset valuation can provide opportunities for organizations to finance capital projects without taking out lines of credit or seeking additional sources of revenue.

Monetizing intangible assets then proves to be a worthwhile source of capital for any organization, especially when these assets are highly marketable. So, how can CFOs monetize the intangible assets their organizations currently hold?

Understanding Intangible Assets

An intangible asset is a non-physical commodity of value. Many can be monetized to provide revenue to an organization. Although these assets cannot be handled physically, they offer significant value to their owners, especially when they are sought after on the market.

Examples of intangible assets include:

• Brand Identities – A brand differentiates a business via a name, logo, symbol, or other unique feature. The purpose of a brand is to develop a company’s equity from the consumer perspective, which builds a sense of loyalty and boosts the pricing of that company’s products or services.

• Goodwill – During corporate acquisitions, the intangible assets transferred from one company to another are defined as goodwill and considered positive or negative, depending on whether the amount of these assets is above or below book value.

• Intellectual property (IP) – IP refers to any intangible asset placed under legal protection to prevent its use by another party without authorization from its primary owner. These intangible assets can be anything from copyrights to franchises to patents and trademarks.

• IPv4 addresses – Of the various types of intangible assets available, IP addresses are commonly overlooked, especially for organizations that carry large amounts of them unused. IPv4 addresses help organizations manage and expand their networks, guiding traffic from one device to another over a networked infrastructure. Better yet, there are well-developed markets for them.

Innovative asset monetization requires CFOs to thoroughly review the assets in their organizations’ inventories to determine which qualify for short- or long-term revenue generation. For some who discover these assets, it may be clear how to determine the value of royalties or sales from selling IP. It may not be immediately obvious how to redeem the value of intangibles like goodwill or IPv4 addresses.

The Hidden Value: Recognizing Unused Intangible Assets

In the tech world, IPv4 addresses are some of the more common types of unused intangible assets that can be monetized for significant revenue. These addresses are typically underutilized or overlooked at the institutions where they may be sitting unused, such as universities or colleges.

Historically, IPv4 addresses were over-allocated to universities during the Internet’s early days, mainly because of oversight regarding its rapid growth and expansion over the next decades. At that time, the Internet was regarded as the foremost research and educational tool, and these institutions were provided with large quantities of IP addresses to meet these needs.

However, many colleges and universities that were granted thousands of IPv4 addresses only used small numbers of them, leaving significant portions unused. Typically, these addresses go entirely unnoticed or listed as “miscellaneous” items on balance sheets and during mergers and acquisitions, limiting their potential value as intangible assets.

For a CFO, IP address asset monetization is challenging because—like other intangibles—these assets may seem difficult to value. Even in the current, open marketplace IPv4 environment prices flucturate. For instance, the price per IPv4 address ranged from $10 to $60 between 2014 and 2022 with periods of rapid increases and stagnation. Regardless, the pricing steadily increased over these years, indicating the consistent demand for these intangibles on the market. Since 2022 prices have generally fallen and then stabilized.

Monetization Strategies for Unused Intangible Assets

So, how can CFOs monetize unused intangible assets to generate revenue for their organizations? Leveraging intangibles for revenue will likely involve:

• Licensing and franchising – Here, companies can sell licenses of their unused intangibles to other organizations, which allows these organizations to use these intangible assets like their own. Likewise, creating franchises of intangibles enables organizations to monetize these assets in the short and long term.

• Sales and leasebacks – Selling off unused intangible assets provides immediate revenue, especially when these assets are in high demand on the market. Leasebacks are also a common way to monetize intangibles as they can free up unused capital, which can help finance more pressing needs.

• Partnerships and joint ventures – Organizations with unused intangibles can partner with other companies interested in these assets, developing customized arrangements to monetize them through collaborative partnerships and joint ventures.

In the IPv4 address space, selling and leasing unused IP addresses can provide the revenue required to fund various initiatives.

IP Address Assets: A Unique Monetization Opportunity

The value of IP addresses skyrocketed after they became exhausted globally. It all started when the organization responsible for allocating IPv4 addresses to regional bodies worldwide depleted its pool of these addresses, creating global demand for their transfer to entities involved in network expansion.

With a low global supply of IPv4 addresses but a surplus of them sitting unused at various institutions, there’s a unique monetization opportunity for CFOs to leverage. Institutions like the Massachusetts Institute of Technology (MIT) are among those that successfully monetized millions of IPv4 addresses for significant revenue. In 2017, MIT announced it would sell various block sizes for at least eight of its total unused 14 million addresses.

Partnering with an experienced IPv4 broker like IPv4.Global can help CFOs interested in successful IP address monetization sell off their organizations’ unused assets in the competitive IPv4 trading market.

Financial Benefits and Corporate Growth

For CFOs, unlocking untapped business value may start with monetizing unused intangible assets. The revenue generated from these assets can provide the cash flow necessary to fund various projects and initiatives. For instance, companies looking to pursue corporate expansion goals can leverage these funds to finance the completion of these projects.

Organizations with asset-heavy balance sheets can also monetize unused intangibles to provide sufficient liquidity to reinvest into their business needs. Consider, for example, an organization with a failing (but fixable) product. By selling off a large block of IPv4 addresses, the CFO could keep the company cash flow positive while the R&D team has a chance to resolve the core issue.

In short, CFOs can strategically leverage the equity in these assets to capitalize on opportunities that are not typically available due to cash shortages or low capital.

Mitigating Risks and Challenges

As with any other form of asset monetization, there are risks and challenges involved in monetizing intangibles. CFOs must consider the legal and contractual ramifications of monetizing, especially when selling, licensing, or franchising them. Although these assets are valuable, organizations who cover all their bases throughout the monetization process ensure any transfer of assets is legally protected.

Beyond exercising legal oversight, CFOs must also be aware of the balance between maximizing short-term gains from monetizing IPv4 addresses and achieving long-term strategic objectives for their organizations. For instance, developing sustainable processes for repeatedly monetizing these assets will ensure the organization reaches its goals successfully.

Looking Forward—Capitalize on Monetizing Intangible Assets with IPv4.Global

A CFO has oversight of the ins and outs of the processes required to monetize intangible assets and unlock the untapped value they provide. As such, the CFO is responsible for recognizing the gaps in bringing these assets to market at a fair and reasonable value for the company.

With the help of trusted IPv4 brokers like IPv4.Global, these strategic CFO approaches can drive corporate value for any organization with unused intangibles. Beyond being a leading IPv4 broker, IPv4.Global provides the education organizations need to monetize the intangible assets in their inventory—unused or otherwise.