Intellectual company evaluation

How IP Supports Valuation  February 22, 2011 – 03:34 pm
How to sell intellectual company?Evaluation and Reporting

Owning intellectual property, in and of itself, does not always drive value; however, not securing the necessary intellectual property can also be disastrous to your business’ valuation when third parties are looking at an investment, acquisition, or merger.  Valuation techniques used for emerging companies often rely on projected revenues over a horizon, or the length of time that the person/group performing the evaluation has decided to use.

The Holy Grail of all businesses is to establish a sustainable competitive advantage.  This can be accomplished in many ways, including the following:

- long-term, exclusive contractual relationships with the limited suppliers of a good at terms more favorable than the competition
- discovering something that nobody else knows and keeping it a secret while utilizing it to generate revenues
- building a brand that causes consumers to choose your goods and services over competitors’ goods and services
- creating barriers to entry that make entry into your market expensive for prospective competitors

Because projected revenues are often used when a third party is performing a valuation on an emerging company, the third parties often like to see intellectual property protections secured before the valuation takes place because these protections may create significant barriers to entry for competitors, can lock up a brand name or names, and can even provide protections when trying to keep information secretive.

Source: InnovaPro Consulting

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(conclusion)

I have been speaking only of oppression overseas, but it need hardly be emphasized that there is a domestic analogue. The reaction to the suffering of oppressed minorities at home is not very different from the brutal apathy towards the misery we have imposed elsewhere in the world. Opposition to the war in Vietnam is based very largely on its cost, and on the failure of American power to crush ... the proletariat paved the way not for a socialist society but for the most primitive type of bureaucratic state capitalism and a reversion to political absolutism which was long ago abolished in most countries by bourgeois revolutions."
12. Address at Princeton, N.J., August 10, 1953. Cited in John H. Bunzel, Anti-Politics in America (New York, Alfred A. Knopf, Inc., 1967), p. 166.

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