mypatentvaluationtool3

mypatentvaluationtool3 - Intellectual property valuation...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Intellectual property valuation model (Simple) By MyPatent (www.mypatent.co.za) Subject to disclaimers For valuation services using our proprietary comprehensive model, please contact www.zaiplaw.co.za © MyPatent, Intangible Consulting (Pty) Ltd, 2007 Company: Asset: Base date: Currency XYZ Co Trademark Dec-08 Rands Disclaimer: TRUE This is a free valuation does not of the inputs or the appropriateness of this valuation methodology Zero everything public is free to usetool. MyPatent their own confirm the correctnessplaced upon MyPatent The this model at risk and no reliance is The valuation determined using this model is not endorsed by MyPatent This is a basic valuation model. Various features in the proprietary model developed by Sibanda & Zantwijk attorneys have been de-activated MyPatent does not guarantee the accuracy of this model or that this model has not been tampered with Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 30.00% 25.00% 25.00% 20.00% 20.00% 15.00% 15.00% 15.00% For years 6 to 10 consider limiting growth to inflation + GDP growth Base turnover in currency of choice Projected growth Average PBIT for period (as % of Turnover) Notional royalty as a % of PBIT Apportionment of royalty to asset valued Royalty rate Income tax rate Discount rate Useful economic life (yrs) 5,000,000 Year 1 30.00% 20.00% 25% 80% 4.00% 29% 25.00% 8 Year 10 15.00% Override royalty? FALSE TRUE 5.00% 4.00% Dec-08 Turnover Royalty payable Tax Profits after tax (life) NPV of royalty stream: 5,000,000 200,000 58,000 142,000 1,147,458 Rands Year1 6,500,000 260,000 75,400 184,600 (Value) Year 2 0 8,450,000 338,000 98,020 239,980 Year 3 10,562,500 422,500 122,525 299,975 Year 4 13,203,125 528,125 153,156 374,969 Year 5 15,843,750 633,750 183,788 449,963 Year 6 19,012,500 760,500 220,545 539,955 Year 7 21,864,375 874,575 253,627 620,948 Year 8 25,144,031 1,005,761 291,671 714,090 Year 9 28,915,636 1,156,625 335,421 0 Year 10 33,252,981 1,330,119 385,735 0 Click here to read our articles on common valuation mistakes 35,000,000 30,000,000 25,000,000 Turnover 20,000,000 15,000,000 10,000,000 5,000,000 0 Dec-08 © MyPatent, Intangible Consulting (Pty) Ltd, 2007 0 0 0 0 Dec-09 Dec-10 Dec-11 Nov-12 Nov-13 Years Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Approximate values of hurdle rates (corresponds to a Treasury Bond of 7%) Risk "Risk free" such as building a duplicate plant to make more of a currently made and sold product in response to presently high demand "Very low risk", such as incremental improvements with a well-understood technology into making a product presently made and sold in response to existing demand "Low risk", such as making a product with new features using well-understood technology into a presently served and understood customer segment with evidence of demand for such features "Moderate risk", such as making a new product using well-understood technology to a customer segment presently served by other products made by the corporation and with evidence of demand for such a new product "High risk", such as making a new product using a not well-understood technology and marketing it to an existing segment or a well-understood technology to a new market segment "Very high risk", such as making a new product with new technology to a new segment Approximate hurdle rate Approximates corporate rate of borrowing, 10-18% 15-20%; discernibly above the corporation's goals for return on investment to its shareholders 20-30% 25-35% 30-40% 35-45% "Extremely high risk", such as creating a startup company to go into the business of making a product no presently sold or even known to exist using unproven technologies 50%-70% of even higher © MyPatent, Intangible Consulting (Pty) Ltd, 2007 Ballpark royalty rates Category Accessories Aerospace Apparel Automotive Baby Goods Baked Goods Books - Softcover Books - Hardcover Building & Construction Business Services Chemicals Child related Computers Consumer Goods Domestics Education Related Electronics Energy & Environment Entertainment Diagnostics Distribution Fast Food Food Footwear Franchises Furniture / Home Furnishes Government / University Healthcare Products / Equipment Hospitality / Leisure Housewares Industrial Products Internet General Manufacturing Machine/Tools Maintenance Services Media & Entertainment Music / Video Medical Equipment Novelties / Gifts Personnel Services Pharmaceuticals / Drugs Pre-Clinical Phase I Phase II Phase II Launched Research Reagents (e.g. expression vector, cell culture, media supplements) Diagnostic Products (e.g. monoclonal antibodies, DNA probes) Therapeutic Products (e.g. monoclonal antibodies, cloned factors) Vaccines Animal Health Products Plant/Agriculture Products Surveys Average Royalty 8.90% 4.00% 3 6.80% 3 3.30% 8 6.00% 1 5.20% 1 7.50% 1 10.00% 1 5.60% 1 11.90% 1 4.30% 7 6.30% 1 4.60% 6 4.80% 3 7.30% 1 8.30% 1 5.10% 9 8.00% 4 15.50% 1 3.50% 1 5.20% 1 5.10% 1 4.40% 7 10.00% 1 5.00% 1 7.00% 1 7.10% 2 6.40% 7 4.50% 2 7.00% 1 6.40% 1 8.20% 2 6.40% 2 4.80% 5 6.90% 1 6.50% 2 7.00% 1 4.00% 1 8.30% 1 12.50% 1 7.50% 6 3.00% 1 7.50% 1 11.50% 1 15.00% 1 20.00% 1 1 1 1 1 1 1 1 3.00% 3.00% 7.50% 7.50% 4.50% 4.00% Printing Publishing Biotechnology Pharma & Biotech Real Estate Restaurants Retail Semiconductors Services Software Sporting Goods Stationery / Paper Telecom / Communications Toys & Games Travel Trademarks and Copyright Greeting Cards & Giftwrap Household Items (cups, sheets, towels) Fabrics & Apparel Posters & Prints Toys & Dolls 1 1 1 3 1 1 1 4 2 6 2 1 3 3 1 1 1 1 1 1 1 5.40% 10.60% 7.00% 5.00% 7.40% 4.60% 6.10% 3.70% 5.90% 9.60% 7.70% 10.00% 5.80% 9.70% 5.60% 10.60% 3.50% 5.50% 6.00% 10.00% 5.50% Compiled using our database of 42 royalty surveys. Please note that royalties may be spread over a range from 0% to three times the "average royalty" and that the above average royalty rates should only be used to support royalty rates determined using first principles. (see www.zaiplaw.co.za) © MyPatent, Intangible Consulting (Pty) Ltd, 2007 Royalty rate factors Main factors: 1 Strength of IP arsenal 2 Monopoly granted by IP 3 Degree to which IP drives sales / profits Other factors: 1 the royalties received by the proprietor for the licensing of the IP in suit, proving or tending to prove an established royalty; the 2 the rates paid by the licensee for the use of other IP comparable to the IP in suit; the the nature and scope of the licence, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the the 3 manufactured product may be sold; the licensor's established policy and marketing program to maintain his IP monopoly by not licensing others to use the IP or by granting licences 4 under special conditions designed to preserve that monopoly; the commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of 5 business; or whether they are inventor and promoter; the effect of selling the protected specialty in promoting sales of other products of the licensee; the existing value of the IP to the licensor as a 6 generator of sales of his non-protected items; and the extent of such derivative or convoyed sales; 7 the duration of the IP and the term of the licence; the 8 the established profitability of the product made under the IP; its commercial success; and its current popularity; the 9 the utility and advantages of the IP over the old modes or devices, if any, that had been used for working out similar results; the the nature of the protected IP; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those 10 who have used the IP; 11 the extent to which the infringer has made use of the IP; and any evidence probative of the value of that use; the the portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the 12 IP or analogous IP; the portion of the realisable profit that should be credited to the IP as distinguished from non-protected elements, the manufacturing process, 13 business risks, or significant features or improvements added by the infringer; 14 the opinion testimony of qualified experts; and the the amount that a licensor and a licensee would have agreed upon if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee - who desired, as a business proposition, to obtain a licence to manufacture and sell a particular article embodying the protected IP - would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have 15 been acceptable by a prudent proprietor who was willing to grant a licence. been Georgia-Pacific Corp v United States Plywood Corp © MyPatent, Intangible Consulting (Pty) Ltd, 2007 ...
View Full Document

Ask a homework question - tutors are online