Value consists in the price of a comparable asset in a similar market transaction. Market approach relates to the quantification and adjustment of pricing multiples in order to create theoretical comparable conditions
Lack of active and transparent market for IP transactions and market dynamics have to be taken into account in the process
Measures the value of an intangible asset by reference to the expected and actualized benefits, incomes or saved costs over the remaining life of the asset. Such prospective-based quantification of financial flows needs to take into account various risk-related factors such as
Endogenous : Extend of IP protection, nature of competition, …
Exogenous : Substitute product development risks, maturity of market, …
The Tool – Part 1 (Choosing a valuation method)
Various parameters help choosing among valuation methods
Maturity of technology
Based on the notion of the technology life cycle. The maturity of a technology impacts the amount of products based on such technology available on markets at the time of valuation.
Strong maturity is needed for market approaches.
Level of novelty
Is to be considered strictly for the considered market . An asset under valuation can be old from a technological standpoint, but new for a given market.
High level of novelty favor cost and income approaches.