Intellectual property valuation

Valuation is considered as one of the most critical areas in finance; it plays a key role in many areas of finance such as buy/sell, solvency, merger and acquisition.
Rationale.
There are numerous individual reasons or motivations for conducting an intellectual property valuation or economic appraisal analysis. A valuation is prepared, for example, for transactions, pricing and strategic purposes, financing securitization and collateralization, tax planning and compliance, and litigation support.
Factors driving the value of intellectual property.
Intellectual property derives its value from a wide range of significant parameters such as usefulness, market share, barriers to entry, legal protection, IP's profitability, industrial and economic factors, growth projections, remaining economic life, and new technologies.
Approaches.
The valuation process necessitates gathering much more information as well as in-depth understanding of economy, industry, and specific business that directly affect the value of the intellectual property. Therefore, such information may be gathered from external and / or internal sources. Finally, the information is devoted to be turned into financial models to estimate the fundamental value of a particular type of intellectual property based on such adapted International Valuation Standards.
The valuation analysts use numerous approaches in order to reach a reasonable indication of a defined value for the subject intangible assets on a certain date which is referred to as the valuation date. The most common approaches to estimate the fundamental or fair value of the intellectual property are defined as the following: