2. Valuation principles
This assessment must be carried out objectively and transparently, so that its results and conclusions are verifiable: to this end, market conditions should be used as a reference wherever possible.
Objective reference to real market conditions is complex, as data is often incomplete: it is often difficult (i) to isolate the value of an asset in a market of complex products, which serves as a support for multiple intangible assets (a product as simple as shampoo may be protected by a copyright and/or a model on the shape of the bottle, a patent on the shampoo's active ingredient, a patent on the cap's locking mechanism and one or more trademarks) and (ii) access to precise information on the product's market conditions, as companies are reluctant to share and disseminate this information, for fear of reinforcing competition through knowledge of information that...
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Valuation principles
The historical cost or replacement cost method
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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