A source for information on valuing intangibles is a book written by Alfred King titled "Valuation: What Assets Are Really Worth." The book is available for $75. ]
FEI Research Foundation Products:
Intangibles: What Their Valuation is Really Worth, March 2002
"Intangibles: What Their Valuation is Really Worth" was written by the Research Foundation based on a tele-discussion led by Alfred King, Vice Chairman of Valuation Research Corporation. Here is how the paper addresses valuing patents:
"While the legal life of a patent is determined by the date of issuance, the economic value may be substantially less. Therefore, the key questions to answer when valuing patents are:
- How valuable is the protection afforded by the patent?
- What are the projected future sales of the patented product?
The most common methodology used in patents is the "Relief from Royalty" approach. This approach estimates what type of royalty would be paid for the right to use the patent in question. If one already owns the patent, then the patent's value is the present value of all future savings from NOT having to pay someone else a royalty stream."
Other sources for patent valuation:
- "Patent Value Predictor" has an interesting Web site. They say that they have developed macro economic models for valuing patents. They charge $100 per patent.
- A similar Web site from 2XFR is 2xfr.com.
For a list of companies that have goodwill on their balance sheet, along with additional information on goodwill, visit the following website provided by Ernst & Young.