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Practical sheet | REF: FIC0632 V1

How can we make the most of intellectual property protection?

Author: Michel ABELLO

Publication date: May 10, 2014 | Lire en français

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    8. The future income method

    There are many variants of this method: one of them is the weighted net margin or expected net present value (ENPV) method, discounted using the actuarial DCF method.

    Please note

    This valuation is based on an estimate of operating income rather than gross margin, and does not take into account all the administrative, marketing, sales and R&D costs required to bring the product to market, which would lead to an overestimation of the value of the intangible asset concerned.

    A valuation based on pre-tax income, which includes financial and exceptional income/losses, would also be inappropriate, as these parameters are not directly linked to the intangible asset and could lead to it being undervalued, if, for example, the company has a very high level of debt.

    The method...

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