Phase

Diversifying the phases of the valuation of intellectual property

Changes and Diversification

Intellectual property is the core in business operation.
It is an important asset in all phases of sales transactions, licenses, M&A, financing, bankruptcy, etc.
It is necessary to know the impact of the value of intellectual property such as patent rights on each phase.

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The value of intellectual property is multi-valued, and it is necessary to accurately understand the purpose of evaluation in order to select and apply an appropriate evaluation method.



M&A
Joint venture
Bankruptcy

  • Most of the technological companies are highly based on intangible assets and investment in knowledge, research and innovation.
  • According to studies, expenditures on knowledge, through investments in R&D or software, have grown at a higher rate than expenditures in tangible assets.
  • This change in investments has consequently been reflected by a heavy importance of intangible assets and patents in companies. Therefore, to know the value of companies it is essential to know the value of their intellectual property.


    • Sell
    License

  • As in other business transactions, organizations negotiating agreements to sell or license intellectual property and patent rights commonly have to agree on a price.
  • Knowing the value of the intellectual property rights is essential to reach such an agreement, but also to make sure the parties are engaging in a good deal.


    • Patent conflict or dispute

  • In scenarios of patent conflict, such as patent infringement proceedings or alternative dispute resolution mechanisms, quantification of damages is often a necessary step of the process.
  • The correct valuation of the intellectual property right at stake is therefore essential to guarantee a fair recovery of the damages.


    • Fund raising through bank loans or venture capital

  • Valuation of the intellectual property to be used as security for bank loans or to attract venture capital and investors is essential.
  • Several studies reveal that, in particular, owning patents and a proper intellectual property management play a crucial role in the decision of venture capitalists.


    • Internal decision making for patent protection strategies

  • Valuation also plays a role on decisions concerning the patenting strategies and country selection for registration of intellectual property rights, or can assist organizations to identify weaknesses such as ownership uncertainties that have an impact in the value of the intellectual property rights and on decisions for the exploitation of such assets.


    • Accounting and Taxation purposes

  • Organizations are required to report on their assets, including their intangible assets.
  • In M&A, Japan Generally Accepted Accounting Principles Business Combination requires that intangible assets be measured and calculating the fair value in order to allocate the acquisition cost to the acquired assets and liabilities at fair value and measure the excess as goodwill or negative goodwill.
  • When transferring intellectual property overseas, it is necessary to calculate the arm's length price due to the transfer price tax system.


    • Patent Valuation Advisory is a professional firm that specializes in evaluating intellectual property such as patent rights.