By Marc Empey
Analysis of IP valuation may not be correct because the analyst may lack experience and understanding of the legal issues in connection with assets. Even when market comparables are provided, comparable contacts should be adjusted to show the differences among various transactions, and the variances in the intellectual property or intangible assets.
Intellectual properties like patents, trademarks, or copyrights are tied to intangible assets.
Due to the advanced nature of IP (and intangible assets), it’s necessary to interact with a valuation firm that has the business experience within the valuation of intangibles and IP and understands the acceptable valuation strategies and approaches to use.
Price is derived from intellectual or legal rights, and from the value they serve as an addition to the other assets. Intangible assets are typically classified into 2 broad categories: (1) Limited-life intangible assets, like patents, copyrights, and goodwill , and (2) Unlimited-life intangible assets, like trademarks and/or logos.
A significant drawback is that of valuing an IP. SBEMP is competent in representing IP in valuation and litigation. Through our representative due diligence, documenting, validity and scope analysis, portfolio assessments that are required of (property rights of all types, goodwill and/or different intangibles like client lists), SBEMP will serve you to support credible valuations.
Moving Forward With Litigation Related to IP and Intangible Assets
Once reliable comparisons and data is accessible, the market approach is accepted as the easiest and systematic route for accurately valuing intangible assets like IP. Acceptable strategies for the valuation of identifiable intangible assets and property represent 3 broad classes.
Specialists refine a large number of practices, the practice of IP valuation still always undergoing new advances, innovation, review, and diligent progression of techniques to price property and intangible assets.
The Value Approach
The value approach is often similar in nature to the business enterprise price approach in that value is predicated on ascertaining 2 completely different values for a company: one, supported the belief that the business has full access to the possession of the property and intangibles, and also the second comparison of what this business would be without these assets.
Imputed Financial Gain Analysis:
Imputed financial gain analysis is a subcategory of methods related to the approach of the traditional methods of gaining income. This analysis is often utilized quite efficiently in appreciating a site name or underlying sub brand under a trademark; or in appreciating specific patents needed for a portfolio.
Branding Contributes to the Value
The methodology of how the company brand contributes is another market-based procedure for valuing an IP. The contribution created by the particular brand made be separated from the profit contributed from different components and factors of the business in multiple ways:
Examples of this are:
1) comparison of prices charged by a manufacturer and distributor of the unbranded equivalent (also called the utility product);
2) if one eliminates the value in addition to the different assets, the acceptable return of investment used with regard to the merchandise is also subtracted (included but not limited to systems of physical distribution, fixed assets, etc.);
3) the profit rate of the business is often associated with the similar return of investment of a similar business with no brand; and
4) comparison of the premium value attained over the valued retail price of its comparable general equal (referred to as the retail premium method).
Do Not Underestimate The Value Of Your IP Or Intangible Assets
SBEMP provides knowledgeable analysis and counsel associated with the worth of every kind of intellectual property and different intangible assets in numerous contexts in order to best serve our clients.