9. The Rule of the thumb empirical method

This method is an empirical variation of a mix of the income and market methods. It is described in detail in the study "Use Of The 25 Per Cent Rule In Valuing IP" by R. Robert Goldscheider, John Jarosz and Carla Mulhern. This method has been used for over fifty years by practitioners and has been recognized by case law (both in the USA and in France, see TGI Paris, September 16, 2009).

This consists of setting the share attributable to the intangible asset at 25% of the operating profit (EBITDA) generated by its use. This 25% value is the result of a statistical analysis of the royalty rates applied on the market, in relation to the profits generated in the business sector concerned.

From this value, the applicable royalty rate can be determined by dividing it by sales. As with the ENPV method, risk coefficients must then be applied: in...