Intellectual property is sometimes perceived - wrongly - as a source of constraint and an expense. However, it is an important lever for growth and a source of value creation, both through the competitive and commercial advantage it provides to your company, and through its attractiveness for your partners and investors.
It is therefore essential to know the financial value of your intellectual property portfolio, in order, for example, to include these assets in the company's balance sheet or to efficiently prepare for a fund raising.
Several methods can be used to estimate the value of your IP portfolio and in particular of your patents, among which three main approaches stand out:
The cost approach, based in particular on the historical acquisition costs of the IP assets. This method is generally considered to be the most objective one, as it is based on known financial data. However, the results obtained by applying this method do not always reflect the differential between the initial investment made and the commercial value of the asset.
The market approach, which proposes to use known transactions on similar technologies or assets as a reference. This method, which takes into account the reality of the market, can sometimes be difficult to implement when the relevant market is recent and/or when there are few references.
The revenue approach, which is based on a projection of the expected revenues from the exploitation of the patent. This method is based on elements and data often assessed upstream by the company. However, the results of such a method may appear to be subjective in certain cases, in particular when an invention has not been exploited at the time of the valuation, and this method must therefore be handled with caution.
The results obtained by these different methods can also be weighted by applying indices taking into account additional factors, such as market specificities, availability or not of competing technologies, technology obsolescence, legal risks, etc.
In practice, it is useful and recommended to cross-reference different methods to best reflect the value of the portfolio.
So, to determine whether you are sitting on a goldmine and to move from a cost logic to a profit logic, have your IP assets valued by an expert.
We will discuss in a future post the different reasons that may require the valuation of your intangible assets.
Find all our articles on intellectual property on our blog #IPBoardingPass