Know-how & trade secret financial valuation

Know-how & trade secret financial valuation

Know-how, whether technical, commercial or organizational, are very specific assets that are not always separable from goodwill. It is the same for trade secret. The absence of Industrial Property (IP) rights related to those assets usually results in a capital, tax, accounting or legal treatment that differ from conventional IP rights.Know-how is often an essential part of the business value or is strongly related to other related IP rights such as patents. They are sometimes the subject of licensing or technology transfer agreements, which require the determination of the financial conditions of those transactions.

METHOD

Methods of know-how financial valuation generally consist in the following:

  • Method based on the reconstitution costs
  • Prospectivist methods based on future earnings.

It is rare to have access to comparable market data.

These financial valuations require a rigorous and delicate analysis.

Finantis Value focuses on understanding:

  • the nature of the know-how,
  • its specificities,
  • its original, transmissible and strategic role for the company,
  • its ability to generate revenue and profits.

This kind of valuation is facilitated if there are contractual or transactional elements to quantify revenue streams, either internally (direct commercial operations) or externally (know-how licensing agreements, technology transfer agreements).

At the end of our mission, we draw up a detailed report stating the nature of the studied know-how, their characteristics, their mode of exploitation, as well as our recommendations to optimize their protection or their value, and of course our quantified conclusions.

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