Portfolio strength and Freedom-to-Operate (FTO) have a huge impact on acquisition totals. There are varying discount rates between 10-30%. This could change the valuation of a company significantly.
IP & Patent Valuation Services
Expert patent valuation services should determine the appropriate value of intellectual property assets & is a critical aspect of any IP transaction and our overarching economics. It is important to understand that reducing risk and increasing profitability must be the primary focus during a patent valuation. These valuations occur during a multitude of technology transfer transactions including the sale, licensing, or acquisition of any IP rights. Hence, the prices paid during an IP transaction must be evaluated for its perceived value, which is obtained through a detailed valuation process before it can be objectively understood by the potential buyer or seller. The necessary skill sets used in an IP valuation are cornerstones of our intellectual property consulting services and include: legal, financial, and technical experience.
Patent value extraction services from GHB Intellect have been derived through direct case experience working with a range of clients. Our broad goal is to provide patent valuation services through Patent Portfolio Analysis and Patent Litigation Support. We then advise each client on how to best leverage the value of their IP portfolios. Specific goals can include an IP audit, IP strategy, IP valuation, IP transaction, or IP due diligence. These specific roles usually depend upon our clients’ individual needs.
In recent years, the IP asset transaction market has grown rapidly. Patents, copyrights, and trademarks define most of the IP transactions. IP asset purchases can strengthen a position during a negotiation, can be used as a risk-mitigation tool, and can be used as investment opportunities. On the other hand, IP asset sales can be a quick way to raise capital and are frequently used to sweeten business deals.
Patent Valuation Support from Start to Finish
If you are considering selling your IP assets, then we can walk you through the steps necessary to close a deal. This includes helping to evaluate the portfolio, strategizing on a monetization approach, marketing the patents and other IP assets, and negotiating the best deal. If you are buying IP assets, then we can help mitigate risks by performing proper due diligence from all angles (Technology, Market, Law, Finance), including assessing the patents and other assets and identifying their fair market value.
Our patent valuation services include evaluating the patent technology, identifying markets and competitors, and assessing legal aspects. From here, we define the valuation model that will result in the most appropriate guidance. Our due diligence methods coupled with our overall science and technology expertise allow us to comprehensive valuation report that is unbiased, credible and reliable.
The Importance of Intellectual Property
Intellectual Property (IP) is a crucial portion of a company’s assets. A strong IP portfolio is instrumental for; fundraising, leverage in business transactions, an exit strategy, M&A valuation. Additionally, having a strong collection of IP provides confidence and relative freedom to operate (FTO). The IP transaction market has grown rapidly, due primarily to the boom in new patents. GHB Intellect Patent Valuation Services have expanded rapidly over recent years as demand for our comprehensive expertise (Technology, Market, Law, Finance) has continued to grow.
Patent Valuation Applications
Patent valuation services have become a major discipline to determine what that patent or a patent portfolio is worth. The principles of sound patent valuation services are important to ensuring positive asset transaction outcomes. We have outlined the types of IP valuation applications in the following subsections.
A strong IP portfolio greatly contributes to a successful IPO. Many business valuation professionals rely heavily on input based on the health of the IP and the valuation of the IP portfolio.
As industries mature, older players benefit tremendously from licensing. A valued portfolio provides leverage in cross licensing portfolios. For example: Intel licenses AMD patents for $1 billion.
Investors always look to IP health of early stage companies. A valued IP portfolio strongly enhances the likelihood of successful fundraising.
Patent valuation services should allow valued portfolios to become much more easily liquidated. In some cases, the value of patents is greater than that of the company itself (e.g. Nortel).
Strategic players are always on the lookout for strong patents. Large corporations look closely at the strength of a patent portfolio before investing. The role of FTO opinion is crucial in any partnership.
IP itself has developed into a market. Whopping transactions in recent decades have occurred through direct and indirect bidding. Nortel, Motorola Mobility, and Eastman Kodak are good examples.
Patents have grown from more fancy and honorary to all-out financial assets. Even though patent sales have been around for more than a century, recent decades have created their own market. This is partly due to the increasing economic abstraction of value. Abstraction of business started a long time ago for several reasons. The more abstract a line of business is, you can expect it to be more; sophisticated in its methods, hidden from laymen, profitable, and scalable. But, that also comes with more risk.
Everyone is trying to commoditize others. An excellent example of this can be seen in the vertical integration of all tech giants. When the chip market moved over in favor of hardware systems, IBM was the leader. Then, the hardware systems market was commoditized and software giant Microsoft became the market leader in the computer world. Next, Google benefited when the software market was commoditized, elevating intelligence, ads and services to the top of the food chain. Finally, we now see further commoditization of the ads and services products and market evolution towards ideas and patents.
Commoditization of the IP market is increasing because old markets are constantly commoditized to be replaced by new markets. Abstraction is inevitable.
Patent Sale Examples
Henry Woodward was a Canadian medical student developing devices for medical field. He was the inventor of the electric light patent filed in 1874. Thomas Edison bought the patent along with many others. This transaction took place some 150 years ago, when Edison, in pursuit of rights to the electric light, bought Woodward’s patent in this field.
75 years later, on August 11, 1942, Hollywood darling Hedy Lamarr (actress by day, inventor by night) co-invented frequency-hopping, the basis of many of today’s communication systems. She, eventually sold this patent to Bell Labs.
As you can see, the commoditization of IP is nothing new. In fact, it has been one of the most important drivers of commercialization of innovation and has significantly impacted the technologies made available to consumers.
Patent valuation services play an important role in this ecosystem. A multi-disciplined set of expertise is required to properly value intellectual property, especially for high-tech/high-science patents. Please contact us if you have any further questions about our patent valuation services. Or, read more about our IP valuation methods for a closer look at how we perform them.
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GHB Intellect is a full-service intellectual property consulting and engineering services firm. With a growing cadre of hundreds of industry-seasoned experts & professionals, as well as access to full suites of design and testing equipment, we specialize in high-tech, science, and innovation.