IP in the Upcoming Tech Debt Crisis: The Untapped Lever for Proactive Financial Restructuring
Presented by Tech+IP Advisors
July 2025
Intangible assets can be a powerful tool in liability management, financial restructuring and M&A contexts, but they must be properly understood, professionally valued, and often, rapidly transacted. Tech+IP, formerly part of Houlihan Lokey, has over the past 12 years worked with top global restructuring groups at leading investment banks and law firms to unlock over $9B of value from intangibles. That IP value was often overlooked prior to our involvement.
Historically, technology companies primarily used equity financing and not so much debt, but in the past 5-10 years that has changed dramatically, and today many are accruing more debt and refinancing old debt in the private credit markets. As these loans mature, we expect a large new wave of restructurings, driven in part by the inevitable dislocation from AI and geopolitical uncertainty. For tech and non-tech companies with strong R&D, deep technology, pioneering software, or AI, their IP can often be material to the size of any deal, and Tech+IP can help realize that value.
Over the past decade, private debt financing has surged across the tech sector, evolving from a niche instrument to a mainstream funding pillar. Total debt deal value involving tech companies—ranging from early-stage startups to mature platforms—grew from under $12 billion in 2015 to over $50 billion in 2024. In that time, tech’s share of the broader private debt market more than doubled, rising from around 4% to almost 10%. This expansion was not limited to traditional venture debt, rather it includes large-scale private loans and direct lending facilities supporting acquisitions, infrastructure, and pre-IPO financing. Notably, Zendesk’s $5 billion take-private in 2022, backed by a direct lender syndicate, demonstrates the willingness of private credit to underwrite multibillion-dollar tech buyouts once dominated by banks. Similarly, CoreWeave, a cloud AI firm, secured a record-breaking $7.5 billion debt package in 2024 to fund its infrastructure growth—more akin to a sovereign-style financing than a startup loan. These landmark deals underscore a structural shift: tech companies at all stages are increasingly relying on private credit, not just equity, to scale operations and navigate volatile markets.
This rise in private credit is transforming the financial structure of tech companies. As non-bank lenders—private credit funds, direct lenders, and asset managers—now dominate large portions of the loan market, their influence on tech financing has deepened. By 2024, private credit providers were behind 77% of global leveraged buyout (LBO) loan volume and accounted for 17% of U.S. middle-market leveraged loans, up from just 7% in 2018. This sea change has led to increasingly complex and bespoke capital structures in tech, often requiring deeper diligence and more robust collateral packages. Unlike traditional bank debt, private credit arrangements are negotiated directly, tend to be more covenant-heavy, and regularly tap into non-traditional asset classes—including IP—as sources of security or repayment.
In this environment, patents, brands, copyrights, data, and trade secrets (together, “IP”) are moving from the periphery to the center of the restructuring equation. Whether underpinning $1 billion-plus refinancing rounds or bridging to liquidity events, IP now represents a critical form of collateral and recovery value. Yet, too often, IP remains underutilized or misclassified in financial models. Unlike factory equipment or inventory, patents offer scalable enforcement value, cross-licensing leverage, and liquidation potential across sectors like AI, semiconductors, wireless communications, and enterprise software. While other forms of IP are undoubtedly valuable, patents are unique in offering defensible, transferable, and financeable rights. In the context of rising tech debt and looming refinancing cliffs, properly valuing and monetizing patent portfolios is no longer optional—it’s a necessary lever for restructuring professionals and creditors alike.
The Cost of Getting IP Wrong Is Rising Fast
With interest rates continuing to hover at near two-decade highs and economic uncertainty in many regions of the world due to AI and geopolitics, the pressure on corporate balance sheets is intense. Among other things, refinancing costs have ballooned and while private credit is abundant, additional collateral and deeper diligence is now often required. According to Reuters, U.S. corporate bankruptcies jumped 33.5% in 2024, reaching an eight-year high, and the trend continues into 2025. Chapter 11 activity has surged across consumer, healthcare and tech sectors, with similar trends in Europe and Asia.
And this may only be the beginning. Many credit analysts project a rolling wave of restructurings across mid-cap portfolios before the end of 2025, as refinancing cliffs hit maturities and interest coverage ratios deteriorate.
In this environment, every asset counts. Yet in many instances assets that have material value—like the IP that could be the most valuable class of assets in many sectors—remains chronically undervalued, under-analyzed, and under-leveraged.
IP: Not Just Legal Paperwork, But Financial Ammunition
IP is not just about legal defense and need not merely be a corporate “cost center.” It should, and in many instances can be:
· A source of short-term liquidity, via IP-backed lending or royalty financing.
· A path to revenue generation or monetization through licensing, divestiture, or litigation.
· A superior source of incremental or core collateral, which can be safely preserved in a bankruptcy-remote Special Purpose Vehicle (SPV).
· A value accelerator in M&A, particularly where the business is underperforming or financial results are lagging, but the technology and IP are strong.
· A recovery enhancer for creditors and equity holders through structured sales or revenue-sharing mechanisms.
However, accessing IP’s benefits requires something most restructuring advisors and tech bankers typically don’t have in-house: the capability and real-world expertise to appropriately identify, value, and transact IP as a standalone asset class. In addition, while law firms that assist these companies and advisors have IP departments, that legal skill set is best utilized when combined with the financial advisory expertise and experience in how the law of IP translates into tangible IP value in the market.
A Diligence-Proof IP Valuation Is Essential—But Insufficient on Its Own
In the IP space, valuation is not a simple spreadsheet or quality-of-earnings-like exercise. It's a strategic, technical, and legal diagnostic tool all in one. Done properly, IP valuation:
· Identifies key technologies where the company has contributed and explores potential applications beyond the company’s current focus. This includes:
o Assessing industry milestones in relevant technologies and determining whether the company led, followed, or lagged in critical innovations—regardless of IP protection.
o Evaluating whether these technologies are already in use elsewhere or likely to be adopted soon.
§ For example, some core telecommunications technologies developed for 5G wireless also apply to Wi-Fi. Medical device innovations often transfer to automotive and other industries, and vice versa. Video technology has evolved from living rooms to phones and now to automobiles.
· Distinguishes between Core and Non-Core IP assets:
o Core IP assets are those essential to ongoing business operations. This distinction is crucial in Chapter 11 restructurings, where DIP and follow-on lenders require assurance that the reorganized entity maintains key protections.
o Non-Core IP assets may be strategically less important or no longer differentiate core products but often retain significant independent market value—especially common in R&D-driven and technology firms.
o Importantly, Core IP assets are not simply all patents related to the company’s main technologies but represent the minimal set necessary to preserve freedom to operate against key competitors.
· Identifies high-value patents currently and those expected to appreciate in value in the near future.
· Maps patents to potential infringers or future users, supporting the financial assumptions underlying the valuation.
· Relies on actual market data, including prior transactions, royalty rates, litigation outcomes, and informal market intelligence—even when the underlying deals are not publicly disclosed.
· Models income scenarios for each target company across multiple pathways, including licensing, sale, and litigation.
· Employs multiple valuation methodologies to serve as reasonableness checks, enhancing credibility and lender confidence.
· Presents findings in familiar financial terms, directly supporting DIP financing, stalking horse bids, and other strategic alternatives.
Why Tech+IP Advisory? IP Track Records Matter
Tech+IP, originally part of Houlihan Lokey, has engineering, legal and financial skillsets, deep experience in both IP valuation and transactions, and history in both large and boutique investment banking and intellectual property specialty firms. Tech+IP has been an advisor of choice to leading companies, creditors and their legal and restructuring advisors in a wide variety of restructuring contexts. (See www.techip.cc).
Tech+IP has worked on high-profile bankruptcies involving companies such as Avaya, Violin Memory, Lumileds, and Helicos, collaborating with advisors like Houlihan Lokey (both during and beyond our engagement), Lazard, PJT Partners, PWP, and Evercore, as well as top law firms including Kirkland, Weil Gotshal, Latham & Watkins, Paul Weiss, and Proskauer. Beyond formal bankruptcy cases, Tech+IP has advised global tech leaders navigating financial headwinds—such as MIPS Semiconductors ($350M in IP), Yahoo ($750M), BlackBerry ($900M), and RPX ($555M IP-based take-private). Across these engagements, Tech+IP has consistently shown how a specialized IP advisor—skilled in both valuation and IP-driven M&A—can create value for companies and their restructuring teams, whether the transaction size is in the millions or billions.
Some of our case study highlights:
· For one client, Tech+IP identified approximately $40 million in monetizable IP within a company traditionally valued at just $13 million. This discovery catalyzed a bridge financing round and ultimately increased exit proceeds by over 35%.
· In the case of MIPS, while a bulge bracket bank sold the operating business for $100 million, our team facilitated the sale of a select portfolio of patents to a buyer consortium for $350 million—more than triple the value of the core business.
· In another engagement, we helped quantify over $450 million in IP value, which underpinned a $1.4 billion debt restructuring. This was followed by a successful patent sale process that added significant post-restructuring liquidity to the company’s operations.
You Can't Value Assets in a Market Without “Being in the Market”
Too often, IP valuation is performed by highly experienced “business valuation” teams or specialists who lack hands-on experience with IP transactions or managing IP licensing programs—and who may be disconnected from the actual market participants in the IP ecosystem. The result? Theoretical value, out of sync with the current market and with no tangible pathway to value realization after the valuation exercise.
At Tech+IP, we're different.
We sell, buy and finance patent and IP portfolios of consequence and market impact. We execute structured IP financings. We negotiate with operating companies, litigation funders, financial sponsors and family offices on Wall Street and around the world. This means we bring real-time, market-tested insight—not hypotheticals, backed by 100s of projects over the past 12 years.
Whether it's sell-side engagements for semiconductor, networking, AI or other deep tech IP, co-advising with bulge bracket banks and global 20 law firms on spinouts of licensing platforms, or enabling private credit providers to lend against IP collateral, Tech+IP is building the IP market every day.
That connectivity translates into credibility and, ultimately, currency.
Conclusion
IP is the Restructuring Lever of the Next Tech Debt Cycle
As the next wave of tech restructurings approaches, the winners—among companies, creditors, and advisors—will be those who treat intellectual property not as a legal footnote, but as a strategic asset class. Patents and other forms of IP have the power to unlock liquidity, preserve enterprise value, and shape outcomes across the capital structure. In this new landscape, financial and legal advisors need IP experts who bring more than valuation credentials—they need execution experience, strategic foresight, and deep connectivity to the IP deal ecosystem.
At Tech+IP, we stand at that intersection. As the crisis looms, our work turns overlooked intangibles into tangible financial outcomes.