Valuation of know-how, technology and patents
Know-how and trade secrets are the intangible assets of almost every organisation. They may be documented in files, diagrams, drawings, or archives, yet such materials are usually only a small part of the entire asset in the form of know-how or trade secrets. These assets form an integral part of the organisation and are part of the intellectual capital of enterprises.
Know-how, technology and patents are part of the strategy of creating competitive advantage. Having such assets favourably impacts the ability of a business to generate revenue, whereas losing control over information being the know-how and trade secrets can pose a significant threat to the organisation.
Assets such as know-how, technology and patents are increasingly being traded, used in reorganisation and as collateral. Their reliable valuation is indispensable for the efficient execution of the above processes.
The methods of valuing the intellectual capital of enterprises include three groups: market methods, income methods and cost methods. The most popular method is that of license fee exemption and of income distribution.
Due to the increasing importance of intangible assets in creating a competitive advantage, the knowledge of the value of key assets has a significant impact on the adoption of a long-term business strategy.
The method of exemption from license fees assumes that companies and organisations may choose whether to favour ownership of the asset or whether to conclude a license agreement with the owner. Fair value is calculated as the present value of the hypothetical money paid to the owner of the asset from which the company is relieved in the event it owns the asset.
The method of income distribution establishes additional cash flows (income) generated by the use of the intellectual capital of enterprises and thanks to an appropriate distribution of these flows between the licensor and the licensee. Fair value is calculated as the present value of the hypothetical income of the licensor.