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CONSOR IP Consulting & Valuation is the only market-based intellectual property valuation firm, that has built a solid foundation of clients and gained invaluable work experience. We are specialized in four basic categories: intellectual property valuation, licensing strategies, litigation support/expert witness services, and transaction assistance. For more information, contact our intellectual property valuation firm at 800.454.9091 or visit our website: http://www.consor.com/practices/ip-valuation/<br>
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CONSOR IP CONSULTING & VALUATION How to Value Intellectual Property CALL US FOR A CONSULTATION 800.454.9091
As a general rule, intellectual property consultants have a choice of four valuation methods available for establishing a fair market value. Various valuation methodologies are used depending on the information available and the situational context. The expertise of an intellectual property consultant is able to assess the advantages and disadvantages of each method depending on market factors such as historical results, industry trends, and competitive environments, as well as on the specific characteristics of the asset(s) and the extent to which they are exploited.
Intellectual Property Valuation Methodologies Market Approach Cost Approach This approach relies on the replacement or historic cost to derive value. Historic cost is the cost to replace an asset at the time the asset was acquired. Replacement cost is the cost that must be incurred if the assets were purchased today. This approach is generally used to establish a minimum value of an IP asset. This approach is dependent on observable and comparable market transactions. Intellectual property is valued by comparing the assets in question to transactions involving similar assets in similar markets. This comparison provides a reasonable indication of value if an active market exists.
Income Approach The income approach is the most widely used method to determine the value of the intellectual property. The income approach calculates the present value of future income streams attributable to the IP. This method forecasts financial results based on factors such as historical financial results, industry trends, and the competitive environment.
Relief-from-Royalty Approach A variation of the income approach that establishes the value of the intellectual property as the capitalized value of the royalties that the company is relieved from paying due to its ownership of the assets. This method uses royalty rates that are based on marketplace transactions as in the market approach and uses a forecast of revenue as in the Income Approach.
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