Patents are the result of risky and costly R&D and the developer will try to recover its costs (and earn a return) through the sale of products covered by the patent, licensing others to use the invention (often a product or process), or through the outright sale of the patent. Patents are typically valued for litigation or licensing purposes. This paper shows how patents can create scalable value, levered by debt and serviced by intangible-driven incremental EBITDA and cash flows. Intangibles like patents are also a vital component of cash generating value and goodwill as an excess return. Operating leverage is enhanced by scalability, with a positive impact on cash generation. Bottlenecks that limit the potential of patents value are also critically examined, with some tips for their minimization.
Moro Visconti, R., patent valuation, Working paper (Urbino, 06-06 April 2018 2018; (1): 1-18 [http://hdl.handle.net/10807/126928]
patent valuation
Moro Visconti, Roberto
2018
Abstract
Patents are the result of risky and costly R&D and the developer will try to recover its costs (and earn a return) through the sale of products covered by the patent, licensing others to use the invention (often a product or process), or through the outright sale of the patent. Patents are typically valued for litigation or licensing purposes. This paper shows how patents can create scalable value, levered by debt and serviced by intangible-driven incremental EBITDA and cash flows. Intangibles like patents are also a vital component of cash generating value and goodwill as an excess return. Operating leverage is enhanced by scalability, with a positive impact on cash generation. Bottlenecks that limit the potential of patents value are also critically examined, with some tips for their minimization.
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