Intellectual Property (IP) is an invaluable asset that contributes to the success and growth of any business. Valuation of intellectual property (IP) based asset is of high importance for any organization that places high emphasis in protecting and managing its IP. This is because unless you are aware of the value of your IP, it would be challenging to determine the returns that it would fetch.
Reasons to Value your IP assets
There are many reasons for assessing the value of an IP. The following are the most important reasons:
- To know the actual value of a company: In the event of merger, acquisition, spin-off, joint-venture, bankruptcy etc it is important for companies to know the value of their IP assets. Many a times, the value of an organization’s intangible assets would way exceed its tangible assets.
- IP license/ sale transactions: It is inevitable to know the value what is being licensed or sold. More often than not, companies prepare due diligence reports to understand the value of the IP that is being licensed, sold or purchased.
- Taxation planning: IP valuation is also helpful in claiming tax deductions.
- Litigation: In the event of IP violation by a third party, it is essential to know the quantum of damages that has to be claimed to redeem the loss suffered by the IP owner. IP valuation is a helpful tool in this regard.
- Preparing reports and accounting: IP, being an important asset, it is essential to know its worth, while determining the value of an organization’s asset.
- Fund raising: It is possible for knowledge intensive organizations to raise finance by pledging their IP as security. This concept is still under debate owing to insufficient knowledge about IP and valuation.
By Aruna Mukundd