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Montgomery Ward: Uncovering Hidden Jewels through Asset Identification

In the 2001-2002 Montgomery Ward wind-down, the key to extracting maximum value was to engage in the identification and triage process. Thorough research and identification of all of the company’s intangibles was needed; originally, management at Montgomery Ward felt that the corporate name and trademark was the only meaningful asset bundle. The identification, bundling and packaging of other intangible assets became more extensive as the intellectual property team searched for the “hidden jewels” throughout the corporation. In the final event, Montgomery Ward ended up with a portfolio of saleable intangible assets including the following:

  • The corporate name, logo and trademarks
  • Various in-house brands and trademarks
  • IT systems and software
  • Database and data warehouse
  • Credit card operations
  • The ultimate hidden jewel, the rights to “Rudolph the Red-Nosed Reindeer”

The core of the assignment was valuation and sale of the corporate trademarks. Exhibit VI-5 summarizes the trademark assets discovered after the intangible asset team searched through all registrations and reviewed common law works.


As always, value is dependant on context and time. As in many sales situations, time was of the essence in disposing of the trademark assets for a very simple reason: While the Montgomery Ward stores were still up and operating, the value of the core trademark and brand assets to a third party substantially increased. A third party buyer could make a transition of the trademark to its own operations, while the Montgomery Ward stores were winding down in an orderly manner. However, it was the reasoned conclusion of the team that with the closure of all the stores the value of the Montgomery Ward trademarks would drop substantially. Finally, if the assets were sold after the closure of all the stores, value would fall even further. Exhibit VI-6 shows the three contexts of value, the methods used to value the trademark assets for each context, and the concluded values of the assets.


What began as a search for trademark and brand assets was expanded as management and the intangible asset team came to understand that there were other substantial and saleable intangible assets in the company’s operating systems, software, databases and other IT assets.

Off-the-shelf third-party software was valued, as were market values for the custom software designed for sophisticated retail management, which Montgomery Ward developed in-house and with the aid of outside developers at a cost of $100 million. Montgomery Ward management had a suite of integrated systems designed for specific functions related to their business, including the following:

  • Smart Auto
  • Smart Service
  • Smart Staff
  • Smart Store

The value of the integrated systems was being substantially reduced, both because of the liquidation context in which the assets were being offered, and because these integrated system assets would need post-sale service and support – a difficult proposition when buying customized integrated IT systems in a distressed environment. The original cost of developing these systems was approximately $90 million, composed of $81 million of in-house development costs and $9 million of third party software acquisitions and licenses. It was estimated that the assets had a then-current value of approximately $10 million. However, a further discount needed to be applied to this amount because fewer than half of the assets were likely to be sold, and those assets would have their values further reduced because of the support issue and the lack of technical assistance in the transfer. For these reasons, the value of these systems in the liquidation environment was established to be at $1.5 million.

Montgomery Ward also had a data warehouse in existence that was quite extensive and very sophisticated. The data was segmented and professionally managed on an ongoing basis, and they held substantial potential value for a third-party user. In addition, an important part of the Montgomery Ward suite of intangible assets was its credit card business and consumer credit information. As with many of the old line retailers, the credit card business was one of the most profitable aspects of the Montgomery Ward operation. In fact, the secured lender, General Electric Corporation, originally became involved with Montgomery Ward through its credit card operations. At the time of final sale of the company and operations and assets, GE was the senior secured lender to the company. As the controlling lender, it elected to spin off the Montgomery Ward credit card operations and sell them to a GE designated operating unit.

As a final small jewel, the rights to one of America’s favorite holiday songs were discovered within the Montgomery Ward portfolio. “Rudolph the Red-Nosed Reindeer,” was written by Robert May for Montgomery Ward as part of a holiday promotion in the 1930s. After searching the company’s archives, partial rights to the song were discovered. This small hidden jewel was an asset that did not generate a great deal of money in the overall scheme of things but, on the other hand, was the easiest and cleanest asset to sell; and those music rights were later sold for less than $100,000 to an investor.

The Montgomery Ward case study can be easily summarized: There were hidden jewels found in the trademark portfolio, in the IT systems, as well as in the company’s archives. Identifying these assets generated substantial value:

  • The corporate trademark and logo eventually sold for $2 million+.
  • Other house brands and trademarks were sold for six figures.
  • The rights to “Rudolph the Red-Nosed Reindeer” generated cash, but less than $100,000.
  • The data warehouse and some supporting pieces of custom software were sold for seven figures.

The moral of the story is that “hidden jewels” can be found within every company’s intangible asset portfolio. Look everywhere. Talk to all levels of management. Search the archives and constantly ask questions.