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Valuation of patent rights is one of the main activities related to intellectual property management within an organization or company. Indeed, knowing the economic value and importance of the intellectual property rights assists in the strategic decisions to be taken on the company's assets, but also facilitates the commercialization and transactions concerning intellectual property rights.
Real options valuation, also often termed real options analysis, [1] (ROV or ROA) applies option valuation techniques to capital budgeting decisions. [2] A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. [3]
The Datar–Mathews Method [1] (DM Method) [2] is a method for real options valuation.The method provides an easy way to determine the real option value of a project simply by using the average of positive outcomes for the project.
Intellectual property valuation is a process to determine the monetary value of intellectual property assets. IP valuation is required to be able to sell, license, or enter into commercial arrangements based on IP. It is also beneficial in the enforcement of IP rights, for internal management of IP assets, and for various financial processes.
The median value of the patents produced was €300,000, with 10% of patent owners reporting values of €10 million Euros or more. In certain cases, [ which? ] [ 24 ] patents may be valued using the techniques developed for financial options , as applied via a real options framework. [ 25 ]
The pay-off method for real option valuation is very easy to use compared to the other real option valuation methods and it can be used with the most commonly used spreadsheet software without any add-ins. The method is useful in analyses for decision making regarding investments that have an uncertain future, and especially so if the ...
Valuation models can be used to value intangible assets such as for patent valuation, but also in copyrights, software, trade secrets, and customer relationships. [16] As economies are becoming increasingly informational, it is recognized that there is a need for new methods to value data , another intangible asset.
Specifically, the value of the firm comprises the value of already active projects determined via DCF valuation (or other standard techniques) and undeveloped reserves as analysed using the real options framework. Product patents may also be valued as options, and the value of firms holding these patents—typically firms in the bio-science ...