Intellectual property ("IP") is commonly being used as collateralization by asset based lenders to quickly and easily finalize deals that could otherwise take longer and be more complicated.  Asset based lenders usually use hard assets such as inventory and equipment as collateral for loans and, in the past, did not involve IP because of the difficulty in valuing it.  However, as more IP is transacted and as IP specialists use sound valuation methods, the collateralization of IP is becoming more and more accepted.

The trend should continue as more IP is being valued highly and transactions involving IP and millions of dollars are occurring more frequently. Some recent examples include celebrities selling rights to names, likenesses, song catalogs, and other IP that has high market value.

Muhammad Ali recently sold the right to use his name and likeness to CKX Inc. for million in cash. Also, CKX paid 0 million for the right to market the name and likeness of Elvis Presley just last year. CKX acquired an 80% stake in GOAT LLC with Ali and his wife keeping 20% of the company named after his trademarked "Greatest of All Time". Estimates of Ali's annual revenue from licensing his name and likeness in recent years are around million. Ali entered the deal because he believes that it will help in having his message and beliefs continued for years to come. CKX sees a valuable opportunity to create revenue using the IP of a world renowned boxing star.

In another deal involving celebrity IP, Courtney Love, the widow of deceased Nirvana front man Kurt Cobain, has sold 25% of her share of the Nirvana catalogue to Larry Mestel of Primary Wave Music Publishing for around million. Love received her husband's 98% share of Nirvanas publishing rights as the beneficiary of his estate when the singer died in 1994. It has been reported that Love has been experiencing financial difficulties recently and will benefit from the million received from Mestel. The catalog of songs is a revenue producing item as it will bring in royalties every time Nirvana songs are played and the songs can also be licensed for commercials or other uses. Love is essentially trading away some future earning power from the catalog for a large sum of money in the present.

Finally, Michael Jackson, who is in financial trouble, is preparing to sell half of his 50% share of the Beatles music catalog that he co-owns with Sony. The catalog, which also includes songs by Bob Dylan, Roy Orbison, and Neil Diamond, among others, is currently valued at billion. This is far more than the original purchase price of .5 million that Jackson paid in 1985 when he purchased it from an Australian tycoon. Jackson is selling half of his 50% share to pay back a 0 loan that was collateralized by Jackson's portion of the Beatles catalog and his own song catalog. Jackson is using valuable IP that he owns the rights to as a way to bail himself out of financial trouble from his extravagant lifestyle and recent legal problems.

These actual transactions are excellent examples of the value of IP and how the value can be realized.  IP can have a legitimate value that may be collateralized against as a common and efficient manner of borrowing larger amounts of money thereby allowing a company to leverage its intangible assets.