The Value of Intellectual Property, Intangible Assets and Goodwill. Kelvin King, founding partner of Valuation Consulting. Intellectual capital is recognized as the most important asset of many of the worlds largest and most powerful companies it is the foundation for the market dominance and continuing profitability of leading corporations. It is often the key objective in mergers and acquisitions and knowledgeable companies are increasingly using licensing routes to transfer these assets to low tax jurisdictions. Nevertheless, the role of intellectual property rights IPRs and intangible assets in business is insufficiently understood. Accounting standards are generally not helpful in representing the worth of IPRs in company accounts and IPRs are often under valued, under managed or under exploited. Despite the importance and complexity of IPRs, there is generally little co ordination between the different professionals dealing with an organizations IPR. For a better understanding of the IPRs of a company, some of the questions to be answered should often be What are the IPRs used in the business What is their value and hence level of risk Who owns it could I sue or could someone sue meHow may it be better exploited e. At what level do I need to insure the IPR risk
One of the key factors affecting a companys success or failure is the degree to which it effectively exploits intellectual capital and values risk. Management obviously need to know the value of the IPR and those risks for the same reason that they need to know the underlying value of their tangible assets because business managers should know the value of all assets and liabilities under their stewardship and control, to make sure that values are maintained. Exploitation of IPRs can take many forms, ranging from outright sale of an asset, a joint venture or a licensing agreement. Inevitably, exploitation increases the risk assessment. Valuation is, essentially, a bringing together of the economic concept of value and the legal concept of property. The presence of an asset is a function of its ability to generate a return and the discount rate applied to that return. The cardinal rule of commercial valuation is the value of something cannot be stated in the abstract all that can be stated is the value of a thing in a particular place, at a particular time, in particular circumstances. I adhere to this and the questions to whom and for what purpose must always be asked before a valuation can be carried out. This rule is particularly significant as far as the valuation of intellectual property rights is concerned. More often than not, there will only be one or two interested parties, and the value to each of them will depend upon their circumstances. Failure to take these circumstances, and those of the owner, into account will result in a meaningless valuation. For the value of intangible assets, calculating the value of intangible assets is not usually a major problem when they have been formally protected through trademarks, patents or copyright. This is not the case with intangibles such as know how, which can include the talents, skill and knowledge of the workforce, training systems and methods, technical processes, customer lists, distribution networks, etc. These assets may be equally valuable but more difficult to identify in terms of the earnings and profits they generate. With many intangibles, a very careful initial due diligence analysis needs to be undertaken together with IP lawyers and in house accountants. There are four main value concepts, namely, owner value, market value, fair value and tax value. Owner value often determines the price in negotiated deals and is often led by a proprietors view of value if he were deprived of the property. The basis of market value is the assumption that if comparable property has fetched a certain price, then the subject property will realize a price something near to it. The fair value concept, in its essence, is the desire to be equitable to both parties. It recognizes that the transaction is not in the open market and that vendor and purchaser have been brought together in a legally binding manner. Tax value has been the subject of case law worldwide since the turn of the century and is an esoteric practice. There are quasi concepts of value which impinge upon each of these main areas, namely, investment value, liquidation value, and going concern value. Acceptable methods for the valuation of identifiable intangible assets and intellectual property fall into three broad categories. They are market based, cost based, or based on estimates of past and future economic benefits. In an ideal situation, an independent expert will always prefer to determine a market value by reference to comparable market transactions. This is difficult enough when valuing assets such as bricks and mortar because it is never possible to find a transaction that is exactly comparable. In valuing an item of intellectual property, the search for a comparable market transaction becomes almost futile. This is not only due to lack of compatibility, but also because intellectual property is generally not developed to be sold and many sales are usually only a small part of a larger transaction and details are kept extremely confidential. There are other impediments that limit the usefulness of this method, namely, special purchasers, different negotiating skills, and the distorting effects of the peaks and troughs of economic cycles. Galaxy S2 Download Odin. In a nutshell, this summarizes my objection to such statements as this is rule of thumb in the sector. Cost based methodologies, such as the cost to create or the cost to replace a given asset, assume that there is some relationship between cost and value and the approach has very little to commend itself other than ease of use. The method ignores changes in the time value of money and ignores maintenance. Business Transfer Agreement Satyam Computer Services Ltd. Satyam Infoway Ltd. Other Business Contracts, Forms and Agreeements. Crack Winrar 64 Bit Windows 7 there. Competitive Intelligence for. Tangible personal property means all goods, chattels, and other articles of value but does not include the vehicular items enumerated in s. Art. Australian Accounting Standard AASB 138 Intangible Assets as amended at 9 December 2004 is set out in paragraphs 1 128. All the paragraphs have equal authority. An intangible asset is an asset that lacks physical substance unlike physical assets such as machinery and buildings and usually is very hard to evaluate. The methods of valuation flowing from an estimate of past and future economic benefits also referred to as the income methods can be broken down in to four limbs 1 capitalization of historic profits, 2 gross profit differential methods, 3 excess profits methods, and 4 the relief from royalty method. Download Game Ninja Saga Mod Apk on this page. The capitalization of historic profits arrives at the value of IPRs by multiplying the maintainable historic profitability of the asset by a multiple that has been assessed after scoring the relative strength of the IPR. For example, a multiple is arrived at after assessing a brand in the light of factors such as leadership, stability, market share, internationality, trend of profitability, marketing and advertising support and protection. While this capitalization process recognizes some of the factors which should be considered, it has major shortcomings, mostly associated with historic earning capability. The method pays little regard to the future. Gross profit differential methods are often associated with trade mark and brand valuation. These methods look at the differences in sale prices, adjusted for differences in marketing costs. That is the difference between the margin of the branded andor patented product and an unbranded or generic product. Computer Software Is Tangible Or Intangible Property' title='Computer Software Is Tangible Or Intangible Property' />Professor Andrew BeckermanRodaus legal website, a resource for students and lawyers interested in patent law and intellectual property law. Definition of Tangible personal property in the Legal Dictionary by Free online English dictionary and encyclopedia. What is Tangible personal property Meaning of. The tax treatment of computer software can be a confusing area. Computer software is an intangible product itself, but it can be acquired in a variety of ways. It may. This formula is used to drive out cashflows and calculate value. Finding generic equivalents for a patent and identifiable price differences is far more difficult than for a retail brand.