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IP Valuation

Introduction

Value creation and growth are the ultimate goal of any management team. IP Valuations are necessary in many contexts. These may include investment analysis, Out-Licensing deals, in-house estimation of the worth of created IP, capital budgeting, merger and acquisition transactions, financial reporting and taxable events, as well as bankruptcy and litigation proceedings. However, one great hindrance to their being considered of significant value is the lack of appreciation of practical methods of valuing them, particularly at the embryonic stages of their life circle and more so under conditions of uncertainty about their future prospects. Lack of practical valuation methods under such conditions would obviously lead to imperfect decision making in the course of managing an IP portfolio.

Our Approach

IIPRD undertakes valuation in two different modes. In case the objective of valuing an IP is to get a monetary estimation of the worth of the Patent/Trade Secret/Trade Mark for In-house use, IIPRD executes Valuation exercises by going through the concerned portfolio of Technologies/Patents/Trade Marks, and the level of protection they have received through registered IPs. To do this, IIPRD conducts a comprehensive technical, commercial and economic assessment to evaluate the monetary worth of the IPs. To perform our valuations, we have developed proprietary IP valuation models (based on Income Approach using Cash Flow Estimations) that, based on accurate parameters including the discount and growth rates, useful economic life, royalty rates and profitability, provide an objective and justifiable valuation of the concerned IP, thereby removing much of the subjectivity involved in the exercise.

In case, on the other hand, the objective of valuing an IP Portfolio is to use the IP In-house and/or License nationally/internationally to a third party, IIPRD does a comprehensive commercial evaluation of each Patent/Technology/Know-how/Trade mark, and values it keeping Licensing/Assignment as the primary objective, by undertaking Freedom to Operate Analysis, evaluating commercial opportunities and value of each Technology/Patent/Trade Mark. IIPRD also helps in end-to-end Out-Licensing of Technologies to one or more potential licensees by assisting Licensors in identifying potential licensees, demonstrating the value proposition from the concerned technology, and negotiating with the interested licensees to finalize the licensing agreement and effect the deal. IP valuation modus operandi also suggests the strategy that the client can adopt relating to prioritization of potential licensees, decide on the best mode of licensing exclusive/non-exclusive and assignment, decision on the License Fees, Royalty payment, and other terms to commercialize the technology.