Patent Valuation Basics – Or what are my patents worth?
Establishing a value for your patents enables your company to enhance decision making related to these strategic assets. This can be particularly useful when assessing the value of a patent portfolio which is to be sold, licensed or acquired. It is also a useful resource during capital raising and due diligence, for instance in a prospectus for a private offering or an initial public offering (IPO) or in a divestment.
- Valuation support for corporate decision making
- Confirming which assets are key value drivers
- Patent Monetization, Debt & Equity Financing
- M&A Pricing
Advantages of a Patent Portfolio Valuation
A key advantage of patent valuation may be to increase the profitability of your business through licensing, selling or raising finance against the patents. For high tech firms that are technology driven, a patent valuation can better establish the net worth of the business; especially if it is an intellectually rich organization i.e. excellent people, skills, technology, IP (patents) but perhaps less value held in customers, revenues, brand, channels.
The best way to find out how much your patents are worth is of course to find out what the market is willing to pay at a given time. Finding a buyer who is willing to pay a price is a good first step and finding several buyers willing to make offers is the best way to understand the range of value your portfolio may possess.
However, another way is to have the patents analyzed and valued. This starts with infringement analysis and various other checks on the patents including validity, legal quality, breadth and relevance of claims and of course comparing the claims to key products and estimating the product revenues that may be infringing. Patent valuation is a highly specialized skill with a variety of proprietary methods used by the experts.
There are several areas of technology that are currently in high demand and these will command the best prices, provided the patents fulfill some key criteria.
A Pricing Rule of Thumb