Expert IP valuation determines the appropriate value of intellectual property assets and should be a critical part of any IP-related business transaction and/or IP monetization activity. It is important to understand that reducing risk and increasing profitability must be the primary focus during a patent valuation. IP Valuations are also necessary during various types of IP transactions (including the sale, licensing, acquisition) or assertions . Hence, the prices paid during an IP transaction must be estimated through a detailed valuation process before it can be objectively understood by the potential parties involved. The necessary skill sets used in an IP valuation are cornerstones of our intellectual property consulting services and include: financial, market, and technical expertise.
Patent valuation services from GHB Intellect have been perfected through direct case experiences over decades working with a range of clients. Specific goals can include IP analysis, IP strategy, IP valuation, and/or IP monetization, depending on our clients’ individual needs.
In recent years, the IP asset transaction market has grown rapidly. Patents are a substantial portion of allIP 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.
When it comes to IP valuations, GHB Intellect offers tiered Financial Valuation Services. These tiers are designed with different purposes in mind, so that our clients may select a tier appropriate for their requirements. The lower tiers are budget-friendly, high-level, and quick valuations that are geared mainly for internal business and strategy planning. The higher tiers, on the other hand, are designed to provide detailed and defensible analyses suitable not only for internal business use, but also for presentation and negotiation with third parties (investors, partners, acquirers, etc.).
The valuation tiers are described and compared below. Note that all valuation service tiers include a complementary technical evaluation performed by one or more of our highly specialized experts in the relevant field(s).
Quick
Basic
Standard
In-Depth
Custom
Quick appraisal to approximate a rough nominal value of assets for internal planning and development.
Basic valuation backed by market research for a more accurate assessment.
Net present valuation supported by client interaction, relevant documents, and feedback.
Complete and in-depth valuation utilizing three separate valuation methodologies.
Fully client-customizable valuation for specialized analyses.
Services Included:
Technical Evaluation
Total Available Market Analysis
Industry-Backed Royalty Rates
Nominal Value Calculation
Income Approach Analysis
1 Patent Family ¹
Tier 1 Services, plus:
Net Present Value Calculation
Invention-Specific Market Analysis
Royalty Rate Comparables
Litigation Risks Review
Potential Infringers
Potential Licensees
Up to 3 Patent Families ¹
Tier 2 Services, plus:
Market Comparables
Enterprise Risk Analysis
Client Interaction and Review
Report for External Use
Up to 5 Patent Families ¹
Tier 3 Services, plus:
Market Approach Analysis
Cost Approach Analysis
Commodity Replacement Cost
Geographical Impact
Up to 5 Patent Families ¹
Tier 4 Services, plus:
Non-Infringing Alternative Cost
Litigation and Appeals Cost
Fully Customized Services
No Patent Family Limit ¹
Quick
Quick appraisal to approximate a rough nominal value of assets for internal planning and development.
Basic
Basic valuation backed by market research for a more accurate assessment.
Standard
Net present valuation supported by client interaction, relevant documents, and feedback.
In-Depth
Complete and in-depth valuation utilizing three separate valuation methodologies.
Custom
Fully client-customizable valuation for specialized analyses.
¹ A patent family is a group of patents that share the same or substantially similar specification.
² Discounts available for multiple evaluations.
Tier 1
Summary: Tier 1 is our foundational valuation service. This tier is designed to provide a general idea of the potential value associated with the subject patent(s). The valuation method for this tier is based on the Income Approach which accounts for: (a) the relevant lifespan of the patent asset(s), (b) a rough calculation of the Total Available Market (“TAM”), and (c) an industry royalty rate, to arrive at a high-level nominal value for the patent(s). Client specific information will be collected via our online questionnaire.
Use Cases: This tier is recommended for patent owners seeking a rough and high-level estimate of the value of their patent(s). The report generated for this tier is only recommended for the client’s internal communication and planning purposes.
Deliverables: One-page summary report which includes estimates on TAM, industry royalty rate, and nominal value of the patent(s). A Tier 1 Technical Evaluation is also included.
Tier 2
Summary: Tier 2 is a more thorough analysis relative to Tier 1, and therefore includes the services described in Tier 1 but is further augmented. Specifically, this tier includes: (a) an analysis of the available market to determine a more accurate Total Available Market (“TAM”), (b) a search for and consideration of royalty rate indicators that are more comparable to the patent(s), and (c) a Net Present Value (“NPV”) calculation which accounts for risk adjustments associated with the patent(s) and the time value of money. Client specific information will be collected via our online questionnaire.
Use Cases: This tier is recommended for patent owners seeking a rough and high-level estimate of the value of their patent(s) but also wish to understand the impact of a more targeted analysis of the TAM, potential royalty rate indictors, and adjustments for risks/time value of money. Similar to Tier 1, the report generated for this tier is only recommended for the client’s internal communication and planning purposes.
Deliverables: A multi-page report which includes estimates and high-level methodologies relied upon to determine TAM, royalty rate indicators, nominal value of the patent(s), and NPV of the patent(s). Source materials relied upon will be provided. A Tier 2 Technical Evaluation is also included.
Tier 3
Summary: Tier 3 is a more thorough analysis relative to Tier 2 and therefore includes the services described in Tier 2 but is further augmented. Specifically, this tier will commence with an introductory meeting to discuss (for example): (a) the relevant patent(s), (b) the intent of pursuing a patent valuation, (c) the potential or current products associated with client and/or third parties, and (d) any relevant documents and/or data (e.g., business plans, industry reports, market segment data, competitor assessments, etc.) the patent owner owns and/or is aware of which may be relevant to the valuation. Through this client interaction, a more in-depth analysis of the appropriate Total Available Market (“TAM”), royalty rate indicators, and potential risk adjustments can be analyzed and evaluated.
Use Cases: This tier is recommended for patent owners seeking a report which contains a more in-depth and informed valuation of their patent(s) and is structured and crafted for internal and external consideration (see deliverables below). This tier is also strongly recommended if the patented technology and/or relevant products fill a niche demand/market.
Deliverables: A thorough report which includes descriptive write-ups of the: (a) subject patent(s), (b) relevant industry and/or market segments, (c) relevant TAM, (d) comparable royalty rate indicators, (e) discount rates and risk adjustments, and (f) a conclusion of value for the subject patent(s). All relevant materials, data, and the valuation model will be provided as part of the final deliverables. We will conclude the project with a meeting to discuss the key findings of the report and answer any questions. A Tier 3 Technical Evaluation is also included.
Tier 4
Summary: Tier 4 is a more thorough analysis relative to Tier 3 and therefore includes the services described in Tier 3 but is further augmented. Specifically, this tier will include not only an assessment of the Income Approach (as described in the lower tiers) but also an evaluation of the Market Approach and Cost Approach. These, along with the Income Approach, are the three commonly used valuation methodologies leveraged to determine the value of a patent asset. The Market Approach looks to market-based indicia such as guideline transactions and other comparable data points to ascertain the potential value of the patent(s) through the lens of publicly available market transactions. The Cost Approach focuses on assessing the value of a patent asset based on the cost to replicate or provide substantially similar benefits provided by the technology embodied in the patented invention. The Income Approach, Market Approach, and Cost Approach will help triangulate the value of the patent(s) in consideration through multiple dimensions.
Use Cases: This tier is recommended for patent owners seeking an in-depth report which considers multiple valuation methodologies thereby providing additional guidance as to the potential value of the patent(s). This tier is also structured and crafted for internal and external consideration (see deliverables below). This tier is also strongly recommended if the patented technology and/or relevant products fill a niche demand/market.
Deliverables: A thorough report which includes descriptive write-ups of the: (a) subject patent(s), (b) relevant industry and/or market segments, (c) relevant Total Available Market (“TAM”), (d) Income Approach analysis, including comparable royalty rate indicators, (e) discount rates and risk adjustments, (f) Market Approach analysis, including identified comparable market transactions, (g) Cost Approach analysis, including identified value indicators, and (h) a conclusion of value for the subject patent(s). All relevant materials, data, and the valuation model will be provided as part of the final deliverables. We will conclude the project with a meeting to discuss the key findings of the report and answer any questions. A Tier 4 Technical Evaluation is also included.
Tier 5
Summary: Tier 5 is a more thorough analysis relative to Tier 4 and therefore includes the services described in Tier 4 but is further augmented. Specifically, this tier is highly customizable to meet the client/patent owner’s exact needs. For example:
Throughout the valuation process, there will be ongoing correspondence and status meetings with the client/patent owner to ensure all ground is covered and relevant feedback is incorporated.
Use Cases: This tier is recommended for clients/patent owners seeking an in-depth report and highly customizable services to fit their specific needs. This tier is also structured and crafted for internal and external consideration (see deliverables below).
Deliverables: A thorough report which includes descriptive write-ups of the (a) subject patent(s), (b) relevant industry and/or market segments, (c) relevant Total Available Market (“TAM”), (d) Income Approach analysis, including comparable royalty rate indicators, (e) discount rates and risk adjustments, (f) Market Approach analysis, including identified comparable market transactions, (g) Cost Approach analysis, including identified value indicators, (h) a conclusion of value for the subject patent(s), and (i) any additional custom analyses as requested. All relevant materials, data, and the valuation model will be provided as part of the final deliverables. We will conclude the project with a meeting to discuss the key findings of the report and answer any questions. A Tier 5 Technical Evaluation is also included.
| TIER 1 | TIER 2 | TIER 3 | TIER 4 | TIER 5 | |
| Expert Technical Evaluation | ✓ | ✓ | ✓ | ✓ | ✓ |
| Precision & Confidence of Estimate | Lowest | Lower | Medium | Higher | Custom |
| Technical Evaluation Tier | Tier 1 | Tier 2 | Tier 3 | Tier 4 | Tier 5 |
| Total Available Market Analysis | Quick | Basic | Standard | In-depth | Custom |
| Industry-Backed Royalty Rates | Quick | Basic | Standard | In-depth | Custom |
| Nominal Value Calculation | ✓ | ✓ | ✓ | ✓ | ✓ |
| Net Present Value Calculation | ✓ | ✓ | ✓ | ✓ | |
| Invention-Specific Market Analysis | ✓ | ✓ | ✓ | ✓ | |
| Royalty Rate Comparables | ✓ | ✓ | ✓ | ✓ | |
| Market Comparables | ✓ | ✓ | ✓ | ||
| Enterprise Risk Analysis | ✓ | ✓ | ✓ | ||
| Client Interaction and Review | ✓ | ✓ | ✓ | ||
| Income Approach Analysis | Quick | Basic | Standard | In-depth | Custom |
| Market Approach Analysis | ✓ | ✓ | |||
| Cost Approach Analysis | ✓ | ✓ | |||
| Commodity Replacement Cost | ✓ | ✓ | |||
| Geographical Impact | ✓ | ✓ | |||
| Non-Infringing Alternative Cost | Available | ||||
| Litigation and Appeals Cost | Available | ||||
| Fully Customized Service | ✓ | ||||
| Report Type | Quick | Basic | Standard | In-depth | Custom |
| Report for External Use Purposes | ✓ | ✓ | ✓ | ||
| Patent Family Size Limit ¹ | 1 | 3 | 5 | 5 | Unlimited |
| Fee ² | $1,800 | $5,400 | $9,950 | $21,650 | CONTACT |
¹ A patent family is a group of patents that share the same or substantially similar specification.
² Discounts available for multiple valuations.
| Scroll right >>> | TIER 1 | TIER 2 | TIER 3 | TIER 4 | TIER 5 |
|---|---|---|---|---|---|
| Precision & Confidence of Estimate | Lowest | Lower | Medium | Higher | Custom |
| Expert Technical Evaluation | ✓ | ✓ | ✓ | ✓ | ✓ |
| Technical Evaluation Tier | Tier 1 | Tier 2 | Tier 3 | Tier 4 | Tier 5 |
| Total Available Market Analysis | Quick | Basic | Standard | In-depth | Custom |
| Industry-Backed Royalty Rates | Quick | Basic | Standard | In-depth | Custom |
| Nominal Value Calculation | ✓ | ✓ | ✓ | ✓ | ✓ |
| Net Present Value Calculation | ✓ | ✓ | ✓ | ✓ | |
| Invention-Based Market Analysis | ✓ | ✓ | ✓ | ✓ | |
| Royalty Rate Comparables | ✓ | ✓ | ✓ | ✓ | |
| Market Comparables | ✓ | ✓ | ✓ | ||
| Enterprise Risk Analysis | ✓ | ✓ | ✓ | ||
| Client Interaction and Review | ✓ | ✓ | ✓ | ||
| Income Approach Analysis | Quick | Basic | Standard | In-depth | Custom |
| Market Approach Analysis | ✓ | ✓ | |||
| Cost Approach Analysis | ✓ | ✓ | |||
| Commodity Replacement Cost | ✓ | ✓ | |||
| Geographical Impact | ✓ | ✓ | |||
| Non-Infringing Alternative Cost | Available | ||||
| Litigation and Appeals Cost | Available | ||||
| Fully Customized Service | ✓ | ||||
| Report Type | Quick | Basic | Standard | In-depth | Custom |
| Report for External Uses | ✓ | ✓ | ✓ | ||
| Patent Family Size Limit ¹ | 1 | 3 | 5 | 5 | Unlimited |
| Fee ² | $1,800 | $5,400 | $9,950 | $21,650 | CONTACT |
¹ A patent family is a group of patents that share the same or substantially similar specification.
² Discounts available for multiple valuations.
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.
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 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.
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.
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.
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).
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 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.
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.
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.
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.
GHB Intellect’s team consists of highly credentialed and seasoned experts and professionals from various disciplines (technology, science, intellectual property, finance, business) who are brought into each project as needed to enable the most reliable analyses and work products. With over 600 experts and professionals, GHB Intellect seeks to never use generalists for any project. We staff each project with experts that best match its requirements and objectives. We also have experienced IP professionals to manage the team and to interface with our clients effectively. To meet our team, please check out our Management Team as well as our Experts.
We offer specific service plans depending on your current requirements.
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