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Market Approach Method

Juan Arias

Created on March 28, 2022

Creado por Juan David Arias

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Transcript

Valuation and Negotiation of Technology

Name: Juan David Arias Valencia.Group: 212032_54. Date: 09-10-2022.

01. TOPIC: Market Approach Method

  • The market approach is a method used to determine the value of assets based on the sales prices of other assets of similar characteristics and/or properties recently offered.
  • It is one of the three most widely used valuation methods.
  • As it is based on comparisons of assets with similar characteristics, it is very useful when there is substantial data on sales values.
  • when talking about assets, intellectual property assets are also included.

02. GENERALITIES OF THE MARKET APPROACH

General

Específicos

  • Technology valuation has a very subjective perspective when giving fair value.
  • The market approach may be useful for negotiating licenses but not as recommended for negotiating technologies or intellectual property assets.
  • The details of the commercial negotiation is confidential and will not be disclosed because it is important and sensitive information in relation to the competition.

03. MATHEMATICAL FORMULA OF THE MARKET APPROACH

04. ¿How can companies create value from their innovation?

How can companies create value from their innovation? By innovating, companies are already creating value because they make possible the continuous improvement of different organizational processes that allow them to position themselves above their competitors. When innovative tools are created, they allow companies to show the market why they are the best option to provide solutions or meet the needs of customers' problems; by providing effective solutions, they create much greater value because they create customer loyalty and customers in turn recommend their services or products to others, increasing the value added to their productivity.

As proposed by Hall, Jaffe and Trajtenberg (2001), the model for the valuation of intangibles at market value is given by:

A: ordinary physical asset. q: magnitude indicator (value close to 15%). K: intellectual assets of the company. Y: shadow value of intellectual assets relative to the value of the company's tangible assets.