How to Value

 With the increasing competition and shorter product life cycles, intellectual property (IP) is considered to be more and more important for companies. As a result, strategic decisions are increasingly dependent on understanding the economics affecting the value of these properties. The increasing activities of acquisition & merger, venture capital funding and initial public offering help to increase the needs for IP valuation. Moreover, internal factors have also contributed to this growing needs, such as transfer pricing, assets movement, international tax planning and future business development.

There are three most widely used valuation methods:

• Cost approach:the cost to create or recreate the asset; this approach assesses the value of assets by measuring the expenditures
• Market approach:the value of the intangible assets are calculated by comparing recent sales or other transactions at arm’s length
• Income approach:the value of the IP is determined based on the future expected income streams that will be generated by the assets. The income approach is the most widely used approach.

In order to better  understand the process of IP valuation, we offer valuation service at Do You Own Valuation.