Intellectual Property Valuation

Intellectual Property (IP) encompasses a broad range of assets falling into a class of assets often referred to as “intangible assets” and including from Brand Names and Trademarks to Systems, Processes and Software.

When undertaking a valuation of a business, the value of IP is often buried in the global catch-all intangible asset value referred to as “goodwill”.

In theory, the intangible assets of a business can only have a value if they are capable of generating profits. However, sometimes the IP relied on by a business will have a value independent of the business itself.

It is possible to “slice up” the intangible asset value into its numerous components including, inter alia, IP, human resources, location goodwill, customers and suppliers or agencies. One reason to value the IP of a business is to quarantine it into a separate entity so as to protect it from creditors. This will usually involve the transfer of the IP to another company or trust and the licencing back to the operating entity which pays a royalty or licence fee to use the IP for a predetermined period.