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Intellectual property valuation

The intellectual property valuation objects include the results of creative, technical, scientific, business activities: TM, inventions, works of art, know-how others. These are intangible assets, they have real monetary value and can be valued. There are such purposes of IP valuation:

  • determine the value of the contribution to the authorized capital of the company;
  • inventory of assets, put into circulation;
  • get a loan secured by exclusive rights;
  • optimize taxes;
  • impress investors;
  • receive income from the transfer of rights;
  • sell or buy IP;
  • to attract investors in startup company;
  • obtain reliable information about the real value of an asset for other purposes.

Intangible objects are unique, it is difficult to calculate their investment or market value using generally accepted methods. For this, special techniques are used. The method is selected depending on the characteristics of the IP object and the goals of the customer.

SION employees specialize in the valuation of IP, have been engaged in this activity for many years. They are good at finance and law. Accredited according to the European valuation standard, which have been confirmed by the Tegova certificate. Professional appraisers by their competent work will help to increase the attractiveness of intellectual assets in the eyes of investors, partners, financial and other institutions. If you need a qualified appraisal of software, trademark, an industrial design, invention, authores rights other types of property, please contact the SION specialists.

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    Methods for assessing the intellectual property valuation

    Often, the real value of a company’s intangible assets is higher than real estate, equipment and other traditional property. One object can be assessed in different ways depending on several factors: whether the rights to it are registered, the degree of readiness for use. If it is supposed to be transferred under a license, then on the nature of the latter (exclusive or not, for how long the rights are transferred).

    There are three valuation approaches to intangible assets (IA): market, cost and profitable. Within their framework, the following methods are distinguished:

    • Sales comparisons. Compare with analogues.
    • Object replacement cost. The costs of creating an asset are summed up in market prices, and depreciation is taken into account.
    • Replacement cost. As before, but without wear and tear.
    • Initial costs. Add up the costs of creation, take into account the indexation of prices in the industry.
    • Cash flow discounting. Financial receipts from future periods are considered, using discount rates they are brought to the price.
    • Direct capitalization.
    • Residual income.
    • Express assessments.
    • Royalty values.
    • Royalty Exemptions.
    • Surplus profits (more commonly used for patents, licenses, TM).
    • Expert judgment.

    These methods are recommended by the International Valuation Standards Committee. The method is selected based on the initial information, customer requirements, economic situation, and many other factors. 

    SION specialists evaluate TM, brands, patents for inventions and utility models, and other IP. For all of them, the same approaches and methods of assessment are used, taking into account the specifics of the object itself.

    Trademark valuation

    Key TM decisions are made based on how much it costs. To understand this, different approaches are used: they compare the mark with other brands from the same market segment, market share, advertising and marketing costs. Absolute grading is also used, without comparison.

    When assessing the cost, the discounted cash flow method is considered optimal. It is used by banks, accountants, auditors. With its help, the international consulting company Interbrand compiles an annual brand rating. It implies that the monetary unit is worth more today than tomorrow, so you need to calculate the discount factor. Consists of 4 stages:

    • Financial forecast – planning future annual income. Based on the balance sheet, operating income, taxes and capital costs are deducted from operating expenses. Receive income from intangible assets.
    • Role of the mark. In income from intangible assets, a share of income from a specific TM is distinguished.
    • Brand strength. Points are awarded for 7 key parameters. The more there are, the lower the discount rate, it is determined according to the schedule.
    • Direct calculation.

    A brand is a promoted, well-known trademark, but it is also a logo. Therefore, the assessment of these objects is carried out according to the same principles. The face value of a ТМ is influenced by the time in the market, recognition, name, product profitability, market share, potential and opportunities for promotion. The experts of our company will help you choose a suitable valuation method, trademark valuation calculate for different goal.

    The designation “logo” is often used to mean “trademark”. When people talk about a logo, they usually mean a trademark, but it is protected by copyright even before the official registration of the TM. A logo can favorably distinguish products from competitors. The promoted signs evoke in the consumer a clear association with a quality guarantee. If the owner has the results of the estimated calculation of the badge (logo), this increases the value of the goods and the IP object itself.

    The estimated cost is determined taking into account the promotion and influence of the logo on the volume of product sales. This takes into account the nuances of the enterprise.

    The cost is:

    • Market. This is the likely price at which the logo could be sold during the transaction.
    • Investment. It is taken into account when investing or contributing to the authorized capital.

    A variety of assessment methods are used from the above. Our appraisers will competently select the analysis method and substantiate the calculation qualitatively. They are well trained and have a lot of practice.

    Trademark value estimation

    TM strive to evaluate in order to:

    • Increase the importance of the business if negotiations, lending, sale of the company are planned.
    • Assign, justify the price when concluding a license agreement or alienating rights. When concluding an agreement between related companies, a detailed calculated price allows avoiding tax claims.
    • Calculate the amount of lost profits from illegal use of a trademark (violation of rights).

    When carrying out a valuation of TM, the market is analyzed: characteristics of the entry of goods under a given brand, advantages and other points. The financial position of the company in recent years is taken into account, an expert forecast is made on income. We will competently evaluate the trademark using the most effective and appropriate method.

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      In each case, the scope of the appraisal work will vary greatly. For example, in addition to title, accounting and technical documents, you may need the following documentation:

      • on the costs of developing and registering property rights;
      • on investments in advertising products using the facility;
      • registration of IP in other countries (if relevant);
      • business plans of the organization and other papers.

      Therefore, the cost and scope of work for each case will also differ. We will calculate these parameters before the start of cooperation and provide a report to the client. Upon completion of the work, we will prepare and submit the final evaluation report with attachments.

      We provide expert appraisal of intellectual property for sale, royalty and franchise price calculation, share capital contributions and other purposes. SION appraisers have confirmed qualifications: they have completed training, internship, passed exams and are included in a special register. Our specialists will take into account all significant factors that can significantly affect the price of intangible assets.

      To start cooperation, please write to us by mail: info@sion-ip.com or dial +38 (095) 629-66-63. We will discuss the details, orientate on terms, necessary documents and other important points.

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