11b valuation presentation v4i-intangible

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Presentación de valoración Elena Canetti- taller CORFO 2012

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11b valuation presentation v4i-intangible

  1. 1. Technology Valuation 2012 4 innovation ecanetti@4innovation.com
  2. 2. IntroducciónVALORACIÓN DE TECNOLOGÍA
  3. 3. Proceso de Transferencia Tecnológica Riesgo Solución Prototipo Empaquetamiento IDEA tecnológica tecnológico y Transferencia Valoración (IP & Market Assessment) Valorización (Valuation)  La valoración y valorización son esenciales en el proceso de transferencia  Valoración-Assessment y Valorización-Valuation  Valoración y valorización son etapas consecutivas en el proceso de transferencia
  4. 4. Criterios de Valoración Tecnología Fortaleza Propiedad Intelectual Competidores y Tecnologías de la Competencia Potencial Mercado Comercial
  5. 5. Tecnología  Descripción  Beneficios  Aplicaciones de la tecnología  Costos de la tecnología  Estado de desarrollo  Regulaciones nacionales y extranjeras
  6. 6. Propiedad Intelectual  Titularidad de la PI  Acuerdos previos  Viabilidad de protección  Patentes relacionadas  Estrategia de Protección
  7. 7. Competidores  Problemas que resuelve la tecnología, soluciones existentes  Tecnologías de la competencia  Competidores
  8. 8. Potencial de Mercado  Mercado potencial  Tamaño de mercado actual y proyectado  Mercado de interés  Requisitos del mercado
  9. 9. 5 Factores de interés
  10. 10. Beneficios de la Valoración Permite identificar nuevas aplicaciones Delinear INSUMO RELEVANTE estrategia de VALORIZACIÓN protección de PI Razones Definir la Fundamentales Reducir estrategia de riesgos comercialización legales Decidir el Definir el modelo de modelo de transferencia negocio
  11. 11. VALORIZACIÓN DE TECNOLOGÍA
  12. 12. 1. What is the right price: Value Vs. Price 2. Basic Methods of Valuation 1. Back Perspective 2. Around Perspective Index 3. Pieces Perspective 4. Down Perspective 5. Forward Perspective 6. Dice Perspective: 7. 7, 8 and 9. Auction, Common Sense and Equity Perspective 3. ConclusionsTechnology Valuation 11
  13. 13. What is the right price: Value vs. Price Value Price An amount considered The sum of money or a suitable equivalent goods asked or given for for something else. something.Technology Valuation 12
  14. 14. Price vs. Value Licensee’s Ceiling Range of Negotiation Licensor’s FloorTechnology Valuation 13
  15. 15. Valuation: a rational process With a valuation basis You negotiate the basis Without a valuation basis You negotiate from emotionTechnology Valuation 14
  16. 16. When is Technology Valued?Prospectively By deal makers, Value extracted over time.Retrospectively By litigators, value established at a point in time. Adversarial: the outcome is imposed judicially.Technology Valuation 15
  17. 17. Prospective Valuation: Financial Forecast The calculation of royalty, depends on:  Technology Scope  Number and scope of patents  Know how  Patent age  Number of potential applications  Stage of technical development  Barriers to market entry  Exclusive or non exclusive rightsTechnology Valuation 16
  18. 18. Basic Methods of Valuation The licensing perspective: 1. Back perspective Costs 2. Around perspective Industry standards, comparables 3. Pieces perspective Ranking/rating 4. Down perspective Rules of thumb 5. Forward perspective Discounted cash flow 6. Dice Perspective Monte Carlo 7. Others Perspective Auction 8. No farther Perspective Common sense 9. Market Perspective EquityTechnology Valuation 17
  19. 19. 1. Back Perspective Methods Is cost to develop relevant? Development costs, patent costs? NO! it is a poor method for pricing. However it can be useful for:  Development costs as a factor in determining value  Modified replacement cost to calculate upfrontTechnology Valuation 18
  20. 20. Also named the Cost Approach Theoretical Background:  Value is determined by the cost to replace or the cost to recreate the IP. Costs include:  R&D, Materials, Equipment, Marketing, Advertising, Delayed Market Entry. Value of the IP:  Fair market value of total investment to replace or recreate the IP. NOTE: A licensee will not pay more for the IP than the amount for which the IP could be recreated. However, by licensing IP from others the licensee avoids development costs and minimizes risk.Technology Valuation 19
  21. 21. 2. Around Perspective Constitutes of looking at sources of comparable transaction data:  Internal Database  Published Surveys  Public Announcements  Word Of Mouth  Litigation  Required DisclosureTechnology Valuation 20
  22. 22. Royalty Rate Standards Product Royalty Comments Materials Processes 1–4% 1 % commodities, 2% processes Medical Device 3–5% Software 5 – 15 % Semiconductors 1–2% Chip design Pharmaceuticals 8 – 10 % Composition of materials 12 – 20 % With clinical testing Diagnostics 4–5% New entity 2–4% New methods Biotechnology 1 - 1.5 % Processes non exclusive 1–2% Processes exclusive Adapted from Lita Nelsen, Director TLO of MITTechnology Valuation 21
  23. 23. Licensing Executives Society – AU NZ Royalty chart No. of Median Avg. Max Min Industry Licenses 4% 4.70% 15.00% 1.00% 35 Automotive 3.60% 4.70% 25.00% 0.50% 72 Chemicals 4% 5.20% 15.00% 0.20% 68 Computers 5% 5.50% 17.00% 0.00% 90 Consumer Goods 4% 4.30% 15.00% 0.50% 132 Electronics 5% 5.00% 20.00% 0.50% 86 Energy & Environment 2.80% 2.90% 7.00% 0.30% 32 Food 4.80% 5.80% 77.00% 0.10% 280 Healthcare Products 7.50% 11.70% 40.00% 0.30% 47 Internet 4.50% 5.20% 25.00% 0.50% 84 Machines/Tools 8% 10.60% 50.00% 2.00% 19 Media & Entertainment 5.10% 7.00% 40.00% 0.10% 328 Pharma & Biotech 3.20% 4.60% 30.00% 0.00% 78 Semiconductors 6.80% 10.50% 70.00% 0.00% 119 Software 4.70% 5.30% 25.00% 0.40% 63 TelecomTechnology Valuation 22
  24. 24. Around Perspective Sources Most valuable tool for determining industry standards is the use of published agreements. Published Data Litigation SEC filing Databases• www.knowledgeexpress.c • Lexis/Nexis • SEC EDGAR system • www.recap.com (Deloitte) om www.lexisnexis.com www.sec.gov/edgar/ • www.rDNA.com• http://pharmalicensing.co • EDGAR online: • http://www.recapip.com m/public/ pro.edgar-online.com or • http://www.recaprx.com• http://www.innovaro.com/ www.tenkwizard • www.royaltysource.com• http://www.yet2.com • www. techagreements.com • Disclosure Information, Inc. www.thomson.com/financi al/fi_partners.jsp Technology Valuation 23
  25. 25. 3. Pieces Perspective The ranking method:  Uses data from similar agreements  Uses a rating table to score the deal compared to known prices from comparable dealsTechnology Valuation 24
  26. 26. The Georgia Pacific Factors: IMPORTANCE OF FACTOR LICENSING OUT SCORE Nature of Protection 4.2 Utility over old methods 4.2 Scope of exclusivity 4.1 Licensee’s anticipated profits 3.4 Commercial Success 3.4 Territory Restrictions 3.5 Comparable License Rates 3.7 Duration of Protection 3.1 Licensor’s anticipated Profits 3.1 Commercial Relationship 3.6 Tag Along Sales 2.1 5 = MOST IMPORTANT, 1 = LESS IMPORATN Stephen Degnan and Corwing Horton, “A Survey of Licensed Royalties”Technology Valuation 25
  27. 27. Common 5 factor approach FACTORS SCORE OF 1 WEIGHTING WEIGHTED TO 5 FACTOR SCORE STAGE OF DEVELOPMENT 2 0.2 0.4 SCOPE OF IP PROTECTION 4 0.2 0.8 MARKET ATTRACTIVENESS 5 0.2 1 (SIZE) SUSTAINABILITY VS. 3 0.2 0.6 COMPETITIVE TECHNOLOGIES INDUSTRY PROFIT MARGINS 3 0.2 0.6 TOTAL WEIGHTED SCORE 3.4Technology Valuation 26
  28. 28. 4. Down Perspective Rules of Thumb  The 25% Rule: the Goldscheider Principle: the Licensor should receive 25% and the Licensee 75% of the pre-tax profits from a licensed product.  The second rule of thumb, converts roughly the 25% pre tax profit to 5% royaltiesTechnology Valuation 27
  29. 29. 25% Rule Meaning of the Rule  The royalty in dollars should be 25% of the savings in dollars to the licensee by the use of the licensed technology  The royalty in percentages of net sale price should be 25% of the profit before taxes, enjoyed by the licensee by selling products based on the licensed technologyTechnology Valuation 28
  30. 30. Example of the 25% Rule Annual Report of Company Y Thousand of US Percentages Dollars Gross Sales 1,249,512 100 Cost of Goods Sold 643,357 52 Gross Margin 606,155 48 Sales and Administration 447,607 36 Research and Development 140,196 11 EBIT (Profit before Tax) 18,352 1 Interest 8,090 restructuring 3,697 Other 9,674 EBT (profits after tax) (3,109) Should the royalty be 0.25 % from net sales?Technology Valuation 29
  31. 31. 5. Forward Perspective Discounted Cash Flow/Net Present Value: The method consists of determining future cash flows, then discounting the cash flows for the time over which those amounts are to be received and by the associated risk of receive such cash flows.  When all such cash flows have been discounted they can be added to determine the net present value (NPV)Technology Valuation 30
  32. 32. Also Named the Income Approach Theoretical Background:  Value is determined by the economic benefit expected from use of the IP. Value of IP:  Present value of the expected future income stream. Key parameters:  Amount of income stream  Duration of the income stream  Risk associated with the realization of the income Note: Two well known methodologies: Excess Earnings and Relief from Royalties.Technology Valuation 31
  33. 33. Value: Risk plus timing and amount of future cash flows METHOD OF CALCULATION OF NPV Sales xxx Expenses yyy Depreciation zzz Royalties rrr EARNINGS BEFORE TAX EBT Taxes ttt EARNING AFTER TAX EAT Depreciation ddd Investments iii Working Capital www NET CASH FLOW NCF Discount Cash by NPV NPV = Rn/(1+k)n Choose k. Embody risk in kTechnology Valuation 32
  34. 34. Calculation of NPV Each year cash flow (R in year n) is discounted by dividing each cash flow (R) by the term (1+k)n, where: k - is the hurdle or discount rate n – the year from the date in which the projected cash flow occurs NPV = Rn/(1+k)nTechnology Valuation 33
  35. 35. Discount/Hurdle Rates for Start-Ups Stage of Development Hurdle Risk Research and Development 100 % Pre-seed funding Start Up 50 – 70 % New business, seed funding, R&D stage 1st Stage 40– 50% New business product ready for sale, no R&D required 2nd stage 30– 40% New product and technology in existing business Mezzanine/IPO 25 – 30% New product, existing capabilities, known technology Low Risk 15% New product for existing manufacturing line and marketTechnology Valuation 34
  36. 36. Example of NPV calculations Total Cash Flows 136,000,000 Investment 10,000,000 Hurdle Rate = k Net Present Value Investment or Licensee’s decision 0% 126,000,000 No Risk yes 7% 49,000,000 Near Risk free, alternative yes investment is 7% 15 % 17,000,000 Low but real risk yes 30 % - 40 % 1,600,000 Significant, technical, Barely yes market and other risk 40 – 50 % - 800,000 Start up risk No, only if you paid meTechnology Valuation 35
  37. 37. 6. Dice Perspective Montecarlo  Complex Mathematical modeling tools  A basic popular tool is the probabilistic model or Monte Carlo analysis  The tool works by replacing certain numbers in the calculation with a probabilistic value. The model is run hundreds of time to develop a distribution of outcomesTechnology Valuation 36
  38. 38. Monte Carlo Simulation Software The popularity of Monte Carlo methods have led to a number of commercial tools. Programs which work directly with Excel as add-ins:  Crystal Ball  Risk Solver  @Risk  DFSS Master  Risk Analyzer  MC Add In for ExcelTechnology Valuation 37
  39. 39. Plus and Minus of Monte Carlo • The model can be run over and over again with changing assumptions PLUS • You get better understanding of the assumptions and their economic impact • High risk technologies are not punished with high hurdle rates. MINUS • There is never a right answer • Requires appropriate software and user experienceTechnology Valuation 38
  40. 40. About the other perspectives 6. Others Perspective: Auction  Technology auctions are rare, however patent auctions are not so rare  They are used for example in cases of bankruptcy or shut down 7. No farther Perspective:  Common sense 8. Market Perspective:  Equity – what is the value of a similar size, similar technology company in the stock exchange?Technology Valuation 39
  41. 41. The Market Perspective or Approach Theoretical background: value is based on the transactions of other purchasers and sellers in the market place. Value of IP: Arm’s length price paid in equally desirable and comparable transactions. Note: The Licensee is not willing to pay more than others have paid for similar IP Comparables: type of IP, industry, market size, terms and profitability.Technology Valuation 40
  42. 42. IP Value in the MarketTechnology Valuation 41
  43. 43. NASA wants to move beyond Technology Auctions AviationWeek.com NASA Wants To Move Beyond Technology Auctions Sep 21, 2010 By Frank Morring, Jr. Washington NASA managers are looking for new ways to get the technology its engineers develop for space exploration out into the broader U.S. economy, where businesses can adapt it for commercial products. A new request for information published on the FedBizOps website seeks suggestions on how the space agency can work with intellectual property management services to match advanced technologies at its field centers with private firms willing to pay for licenses to use the publicly funded technology for private profit.Technology Valuation 42
  44. 44. Patent Transaction The Sale and/or License of Intellectual Property – Patents Basic Process  Review and estimate valuation of the assets  Diligence and preparation of the assets to market  Preparation of marketing materials  Identification and contact of potential acquirers  Fielding, negotiation of and advisement on received offers  Advisement on all aspects of documentation and transfer  Escrow Services (as necessary)Technology Valuation 43
  45. 45. Conclusions The Valuation of the technology is an essential part of the technology transfer process With a valuation you negotiate with a sound economic basis and not from an emotional basis Valuation of the technology is a way of determining the licensed technology value for the customer (licensee) and not only for the inventors (licensor) Using more than one valuation method gives you a broader perspective, and accounts for a range of different factors Valuating your technology is an excellent way to prepare for the negotiation of a successful deal (win win)Technology Valuation 44
  46. 46. 4 innovationinfo@4innovation.comElena Canetti - Israel Partnerecanetti@4-innovation.com

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