5. Determining the future operating period
The period taken into account in a valuation is generally quite long, especially when launching an innovative new product, as it takes some time for the technology to reach maturity on the market, and for initial investments to be amortized.
However, the longer the period of future operation, the greater the uncertainty, and this uncertainty needs to be taken into account in terms of the risk of technology obsolescence, the risk of competition from another more innovative or economical technology, market developments, etc. The longer the period of future operation, the greater the uncertainty, and this uncertainty needs to be taken into account in terms of the risk of technology obsolescence, the risk of competition from another more innovative or economical technology, market developments, etc.
When it comes to patenting inventions, the...
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Determining the future operating period
Discounting methods
Bibliography
R. Goldscheider, J. Jarosz and C. Mulhern, Use Of The 25 Per Cent Rule In Valuing IP , LES News, December 2002
Websites
http://www.ipresearch.com/index.htm Intellectual Property Research Associates website, offering information on licensing rates by industry sector.
www.lesi.org Licensing Executives Society website
Acronyms and abbreviations
CAPM: Capital Asset Pricing Model
WACC: Weighted Average Cost of Capital
DCF: Discounted Cash Flow
EBITDA: Earnings Before Interest Taxes and Amortization
ENPV: Expected Net Present Value
ISO: International Organization...
Vocabulary
Due diligence: financial audit
Cash flow: surplus of financial flows generated by the operation of intangible assets.
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