Valuation is a controversial topic when it comes to intellectual property – the so-called ‘intangible assets’ of a company. Is it really possible to value something that you can’t really see? We believe that it is. Whilst many companies profess to value these intellectual assets, very often that valuation is based on a historical perspective. However, it is important to look at quality, future market conditions, as well as financial factors when it comes to valuing an organisation’s assets, and that anyone planning to invest in a company, as well as the owners and managers of an organisation who may be looking for additional funding, or acompany sale, needs to be as clear as possible about the important role that intangible assets play. In addition, identifying valuable assets can help when building the future direction of the company thus determining which assets should be the focus for commercialisation.
Other reasons for needing to know the value of a company include preparing for licensing negotiations where an inventor wants to know the value of their IP; buying and selling IP portfolios; for insolvency practitioners, where the value of the IP remaining in the company needs to be known; and for probate – when the deceased is the author of a book for example, and a valuation of his or her estate, including the value of any IP, needs to be made.
We believe that firms engaged in IP valuation should offer not only commercial evaluation of intellectual property and inventions but also provide firm professional opinion as to their legal and commercial robustness. Opinions should be clearly stated; and clients should not be left to interpret legal jargon.
All very well, but how is an accurate valuation actually made?
For full article on knowing your true value
LES News Exchange, January 2011