Australian stock valuations are probably depressed by low patent activity. Australian companies hold no defensive patent portfolios to assert in defence against corporate behemoths moving into Australia. Australian company boards may be liable for patent infringement risk management.
Intellectual Property Valuation
What is intellectual property (IP) valuation?
Is IP valuation relevant to my business?
In most businesses, tangible assets only make up a small fraction of the total value of the business. The remainder of the value has traditionally been referred to under the broad term “goodwill” and encompasses patents and trade marks. Very little effort has been made to identify, quantify or plan around this value. There are very few businesses that do not fall within this description, and it is highly likely that yours does too.
Why value my IP?
IP valuation is carried out for a variety of reasons, such as:
- As part of a larger company valuation for a merger or acquisition
- As part of high-level strategic intellectual property or business planning
- In order to obtain an independent valuation of intangible assets for capital gains tax (CGT) purposes
- For a joint venture deal to establish whether the parties are contributing items of equivalent monetary value
- In justification of tax returns
While the instances mentioned above are the main reasons why IP valuations are carried out, there are other important benefits of having patent valuation or other such IP valuation carried out. Not the least of these is the recognition of the various discrete items of intellectual property that in some cases can make up more than 80% of a business’s value.
Together with the recognition of these discrete items of IP – for example the business’ patents or trade marks – comes an understanding of the part that these discrete items must play in the functioning of the business. This understanding allows for a better ability to plan for the leveraging of that IP to maximise its value in the business.
In some cases, just having a compass that points directly to the source of the intellectual property value differentiators in your business and is explained in a clear and understandable manner allows for the business and its strategic planning to be viewed in a new light.
When management of a business has a good understanding of its intangible assets, they can leverage them for maximum value, such as for attracting investment.
What is your patent worth?
If you want a better understanding of the value resident in the intellectual property assets of your business, then feel free to contact our in-house IP valuation group, headed by Mike Biagio.