Reviewed by Emmanuel Ejiogu
Understanding the valuation of patents, trademarks and other forms of intellectual property is essential for business in the high-tech sector, and many other sectors of business today. And Dollar Value: The Valuation of Patents, Start-ups, Software and Other Intellectual Property Assets, remains the “go-to” book.
The book is for intellectual property lawyers, inventors, business executives, entrepreneurs, business strategists, and anyone interested in intellectual property and technology.
Contents of the book include: common approaches for the valuation of patents, trademarks, software codes as well as internet domain names. It also includes common approaches for the valuation of established businesses, product lines, businesses in mergers and acquisition transactions, as well as start-up companies in venture capital and other financings.
Smith focused extensively on valuation scenarios that are not so well understood: Smith noted that “the price tags attached to intangible assets such as patents and start-up companies can reach hundreds of millions or billions of dollars and there’s a misconception in the general public that these figures are the result of some form of black magic or insanity emanating from Silicon Valley. This book describes the techniques used to assess real-world valuations of technology-oriented assets and explains how the prices offered by buyers looking to acquire the ideas and productions of inventors, creators, developers and entrepreneurs can be predicted with some accuracy.”
Smith noted that “the prices offered by buyers, and the prices ultimately accepted by sellers, are based on solid foundations. Valuation techniques involve looking at revenues flowing in, revenues flowing out, and the behavior and practices of buyers and sellers in the marketplace. We can look to the past to see if the asset has a history of generating revenues, we can look to the future to see what revenue and savings potential the asset might be able offer, and we can look around today at the present state of the market to see what prices are being agreed in similar transactions.”
In other words, the book covers the following valuation approaches: “Income approaches”, which calculate value based on the future revenue streams; “cost approaches”, which mostly calculate the value at the cost of replacement of the asset; and “market approaches” which calculate the value by comparisons with similar assets recently traded in the marketplace.
This is the first edition of the book, and it has 104 pages. The book is written in an easy-to-understand way. Also, the book contains interesting anecdotes, which “drive home” the points outlined in the book.
Reviewed by Emmanuel Ejiogu.
