Intangible Asset Valuation
Our intangible asset valuation services, technical strength, and deep experience are unparalleled.
At a technical level, we have developed methods and conceptual approaches that we believe are unique in the field. These include, but are not limited to, the following:
We’ve integrated economic “equilibrium” concepts into our profit split models. Profit split models are designed to use the investments made by a hypothetical arm’s length licensor and licensee to determine the relative economic claims of each party. Our investment-based profit split models use this basic framework, with important and proprietary equilibrium concepts incorporated into them.
The notion of a “workaround” or “replication” alternative as an indicator of value is a commonly employed one. We have researched and applied this notion extensively, and bring to bear an extensive economics literature on technology leakage and patent strength to this kind of analysis.
Economic Useful Life
Economic useful life is a concept that is often employed, but rarely employed rigorously. Our approach to economic useful life is much more rigorous, in our view, than the approach typically employed. Our white papers on this topic have been referenced in court decisions and, among other things, demonstrate that the economic useful life of an asset can be inferred from a forecast.
Royalty Predication Models
We have also developed, and employ, a closed form model of licensor and licensee negotiation. This model extends research first conducted by Norman Gemmell, and produces important results regarding the maximum royalty rate (and profit share) that a licensor can extract. Where appropriate, we use this model as a means of checking our analysis conducted under other methods.
Intangible Asset Cost of Capital Models
We have developed unique techniques for determining the cost of capital associated with non-routine intangible asset accounting. While it has long been asserted that intangible assets are “more risky” than physical assets, for the most part the valuation field did not have an analytical methodology for determining how much more systematic risk intangible assets carried. Our techniques for determining this are described in our textbook and white papers.
Licensor & Licensee Cost of Capital Models
In a very similar manner, we have developed proprietary techniques for determining the cost of capital for licensors and licensees. These techniques are also described in our textbook and white papers.
In addition to well over 250 engagements involving the valuation of all types of intangible assets for transfer pricing purposes, our economists have also valued intangibles for third party joint venture negotiations, and for IP damages claims.