Companies protect their intellectual properties because it keeps them on the lead in a greatly aggressive industry. It is also essential for businesses to extract the value of intellectual properties so they would know how to make their innovations financially advantageous. However, it is not easy to allocate a monetary value to an intangible asset like the intellectual property. A consulting firm is often appointed by companies to carry out an intellectual property valuation, to make certain everything is done correctly.
In order to get the right value, the valuation analysts need to search for information regarding the invention first. Through the information they gathered, they will be able to come up with a financial model that will help ascertain the fundamental value of the intellectual property. There are different methods to valuate an intellectual property, but the one that most of the analysts use is the economic analysis method. There are three different approaches for economic analysis valuation which include cost, market, and income.
When the cost method is used, the value of the intellectual property will be based on the cost of development as well as the value that will be utilized when recreating it. The income approach is utilized to set a value to an intellectual property based on its capacity to maximize revenues in the future and/or its ability help the company in decreasing cost. On the other side, the market-based approach can solely be utilized if there is already a pre-existing and active market for the IP.
In case of bankruptcy, merger, or acquisition, the deal would always consist of the intellectual properties and all the other intangible assets. The book of the entity should show the value of their intellectual property during financial transaction that is why an intellectual property valuation should be made upfront. They can also utilize this for tax planning, collateralization, and as back up in case they got involved in litigations.
An extensive awareness on intellectual property laws and economy is a must when finding an analyst. Valuation analysts should also make certain that they know the business that the intellectual property owner is in. It will be simpler for them to ascertain the elements that affect the intellectual property s value.
Analysts who are working in trusted consulting firms carry out intellectual property valuation precisely because they have an extensive experience. It is their task to make sure that violation will be stopped in order to avoid any damages. Disagreements related to intellectual properties should be prevented. If the sole solution available is litigation, then it is necessary that an intellectual property lawyer examine the case. They will also offer their clients with all the data they need to make an intelligent decision.
Entities value their intellectual property because it can help them in numerous ways. It can give them more reputation and revenues if utilized properly. An intellectual property lawyer already knows how to use the laws efficiently to secure the intellectual property of the company. This is the reason why business people only select a lawyer that has an intensive knowledge, skills, and experience in the field. It will make certain that the lawyer is able to do the needed job.