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Here are the top 10 tips for valuing intellectual property (includes trademarks & patents)

1. Value by definition is, ‘The value of any commercial asset is its ability to generate

income.”

Having a patent or trademark or other intellectual property can sometimes not be enough

on its own when determining the value of your intellectual property, therefore deeming

your business unsellable. You need to ensure you have assessed the current economic

market, competitors, and pricing to ensure your business can be valued accordingly.

2. Do you own it outright and unequivocally free from challenges and charges?

This is often the biggest inhibitor to valuing intangible assets. Poor or lack of effective

documentation with employees, former directors, shareholders, contractors, etc., leads to

uncertainty as to who actually owns the asset or whether it is encumbered in any way.

3. Is the intellectual property identifiable, and distinguishable, and able to be

separated and sold off from the business as a whole, or is it just another important

but piece of the business collective?

People talk about the value of the Coca Cola brand or the unique patented bottle, but it

isn’t A brand it is multiple brands, trademarks, and the secret recipe and the marketing

and brand identification that goes with the bottle, etc. if you sell off or cease using any

one of those items does it change the business economic value?

4. “Start with the end in mind.”

Don’t do a quick & cheap set up of ownership structure or any aspect of IP design,

documentation, or development as it may cost a fortune to fix later. Engage the experts

now and get the right advice. Don’t be penny wise and pound foolish!

5. Kep a Due Diligence File

The best protection you can get is the right documentation prepared by the right people.

6. Systemise and proceduralise everything you do so there is no reliance on any

individual that could be lost.

7. Keep and maintain good financial records.

How else do we value an asset if we do not have financial records of the past which

enables us to prepare defendable forecasts in the future.

8. Non-Disclosure agreements

If there’s something confidential and integral to your sustainable competitive advantage,

keep it secret and don’t let anyone that does not need to know it have access to this

information.

9. Separate the Product from the person

Don’t build your business or brand around yourself, if you are the most important thing in

your business, controlling all aspects, contacts/relationships, what happens to the value

of your business if something happens to you?

Build in succession and avoid what is called “Personal Goodwill”.

10. When you think you may want a valuation done, don’t leave it till the last minute.

It takes some time to do without fail—there is tidy up work to do that will improve the

value if you leave it too late. This tidy up work may not be able to be done and you could

reduce the value or even worse, lose the sale.

#inventor,?#funding,?#training