VPGA 6
Definition
VPGA 6 is the RICS Red Book Valuation Practice Guidance Application that governs the valuation of intellectual property rights, including the specialist scenario of intangible assets pledged as loan collateral. It sits within the RICS Valuation - Global Standards (Red Book) and works alongside the RICS professional standard "Valuation of intellectual property rights" (2020) and the International Valuation Standards, so that vpga 6 intangible assets work is delivered to a consistent, auditable credit standard rather than an informal estimate. Its Appendix A, "Valuations supporting IP debt financing", is the part lenders care about most: it directs the valuer towards an orderly-liquidation or forced-sale premise for collateral, and it warns that a single "most likely" figure must never obscure downside outcomes. In practice this means the report should present value ranges and sensitivity analysis, and adopt deliberately conservative inputs for lending purposes - a low-end royalty rate, a risk-weighted discount rate, a finite economic life rather than a perpetuity, and cautious or absent terminal value. For a lender, a VPGA 6-compliant report is the difference between a defensible security valuation and one that collapses under scrutiny in an insolvency. For a borrower, it disciplines expectations: the figure supporting a facility is not the same as a headline going-concern valuation. A worked UK example is NatWest's High Growth IP Loan, where the pledged IP is appraised and revalued annually by an independent valuer against exactly this kind of conservative, standards-based framework before a facility of £250k to £10m is advanced at up to around half of appraised IP value. Accountants and corporate-finance advisers preparing a client for IP-backed borrowing should ensure their valuer is instructed on a Red Book, VPGA 6 basis so the report is fit for a credit committee, not merely for management accounts.
Complementary Terms
Concepts that frequently appear alongside VPGA 6 in practice.
The RICS Red Book is the professional framework, formally the RICS Valuation – Global Standards, that governs how RICS-regulated valuers carry out and report valuations. It sits alongside the International Valuation Standards and adds mandatory professional requirements, and for IP-backed lending its Valuation Practice Guidance Application 6 (VPGA 6) and the accompanying guidance on the valuation of intellectual property rights are the reference points.
Basis of value is the fundamental assumption about the transaction and parties that a valuation measures - in effect, the precise question the valuer is answering. Under the International Valuation Standards the basis of value is a formal statement (renumbered to IVS 102 in the 2025 edition, previously IVS 104) that must be selected and disclosed before any figure is produced, because the same intangible asset can carry very different values depending on which basis is chosen.
Premise of value is the assumption about the circumstances in which an asset is exchanged - in particular whether it is sold as part of a continuing business or realised on its own, and how much time the seller has. Where the basis of value fixes which question the valuer answers, the premise of value fixes the conditions under which the exchange is assumed to occur, and the two together determine whether a figure is appropriate for lending.
A liquidation premise is the valuation assumption that an asset is sold on its own, over a defined timescale, rather than valued within a continuing and profitable business. It is the premise of value that the RICS Red Book and VPGA 6 direct valuers to adopt when an intangible asset is being appraised as loan collateral, because it mirrors the situation a lender actually faces on enforcement: the borrower has failed and the IP must be realised separately from the enterprise it once supported.
Forced sale value is the estimated proceeds from selling an asset under compulsion and time pressure, where the seller cannot wait for a proper marketing period. It is the most conservative of the common realisation bases, sitting below both market value and orderly liquidation value, and it reflects the discount a buyer extracts when they know the sale must happen quickly.
IVS 106 is the International Valuation Standards reporting standard that governs how a valuation is documented and communicated. It sets out what a valuation report must contain so that its user, in IP-backed lending the lender's credit team, can understand the basis of value, the premise, the approach and the assumptions behind the figure and rely on it.
A loan-loss provision is an amount a lender sets aside to cover the losses it expects to incur on a loan or portfolio, reflecting the probability of default and the loss it would suffer after recoveries. The size of a loan-loss provision is driven directly by the recovery a lender can realistically expect from its collateral, which is why IP-backed facilities are provisioned conservatively.
Saleability is how readily an intangible asset could be sold or licensed to realise cash, particularly on a default when a lender must dispose of security within a constrained timeframe. Where separability asks whether an asset can be detached from the business at all, the saleability of an intangible asset asks the harder market question: is there an identifiable pool of buyers, a functioning secondary market, and a realistic prospect of achieving value within an orderly-disposal window rather than a distressed fire sale.
Further Reading
IP Finance in the UK: How to Borrow Against Intangible Assets in 2026
How IP-backed lending works in the UK — which assets qualify, valuation methods banks accept, typical loan terms, and how to prepare your application for IP finance.
Read more →Related FAQ
Why do lenders use a forced-sale premise for IP?
Because on default a lender must realise the IP quickly, not sell it at leisure. A forced-sale or orderly-liquidation premise estimates what the asset would fetch under time pressure, giving a prudent basis for setting how much to lend.
Read full answer →What valuation standard does a lender need, IVS or RICS?
Both. Lenders expect a valuation prepared under IVS 210 for intangible assets and delivered to the RICS Red Book, whose VPGA 6 and Appendix A set out how to value IP for debt financing.
Read full answer →What loan-to-value ratio do lenders offer on intellectual property?
Indicatively, IP loan-to-value runs from around 20-40% in the broader market up to roughly 50% for registered, insurance-backed rights, against an orderly-disposal rather than going-concern value.
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