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Market approach method

Jose Quimbayo

Created on April 14, 2024

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Market approach method

Jose Luis Quimbayogroup: 177 April 2024

Definition

The market approach method is a valuation technique that determines the value of technology based on comparable market transactions. It involves analyzing similar technology licensing agreements and market norms to estimate the value of intellectual property.

Processes related and mathematical formulas

Comparative Analysis: Evaluate recent licensing agreements for similar technologies to determine royalty rates. Royalty Rates: Use industry-specific royalty rate ranges as a basis for estimating technology value. Estimated Value = Net Sales × Royalty Rate Estimated Value = Net Sales × Royalty Rate

How can companies create value from their innovation?

Companies can leverage innovation to create value through: Licensing Agreements: Licensing out technology to other firms for a royalty fee. Strategic Partnerships: Collaborating with industry leaders to develop and commercialize innovative products. Market Expansion: Using patented technology to enter new markets and increase revenue streams. Monetization: Generating revenue through intellectual property rights, such as royalties from licensing.