For businesses, there are many reasons to assess the value of intellectual property that bring benefits to them: internal management of intellectual assets, licensing, mergers, asset transfer (sale) of intellectual property, purchasing intellectual property, participating in joint ventures, establishing strategic alliances, raising capital, further investing in intellectual property, etc. The reasons and specific types of intellectual property being valued play a crucial role in choosing the valuation method.
The value of intellectual property can differ when using different valuation methods. Other factors such as experience and the availability of data to perform a specific method can also influence the choice of valuation method.
Intellectual property rights (e.g., exclusive patents) may be valued higher if the sales or licensing period does not coincide with the introduction of additional or replacement technology or if the technology is market-effective. Therefore, having a comprehensive understanding of industry or technology trends when conducting valuation is essential.
It’s also crucial for businesses to understand why they need to value intellectual property and the timing of the valuation. Fundamental knowledge of the tools used for valuation can be very helpful in choosing the most appropriate and informed decision-making tool.
