Software valuation

Évaluation financière des logiciels et solutions digitales

Finantis Value is specialized in the financial valuation of softwares, applications and other digital solutions.

They constitute intangible assets and can then be the object of capital transactions (capital contribution, transfer of assets …), tax issues, accounting operations (sale, acquisition, revaluation …), strategic operations (search for partners, fundraising …) or legal issues (litigation, prejudice).

In all these cases, the question of their financial value arises.

These intellectual property rights differ from other copyrights (such as music, videos), trademarks or patents:

  • They are subject to constant evolution and maintenance,
  • Counterfeits and copies are difficult to detect,
  • Their protection is more complex and can rely on complementary IP rights
Évaluation financière des logiciels et solutions digitales

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Évaluation financière des logiciels et solutions digitales

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But these assets must also deal with their market, profitability and return on investment issues.

Prior to this kind of valuation, we make sure that the company holds the software’s IP rights or exploitation rights.

Then, in addition to analyzing the investments made for its development, we study the market data in order to identify, if possible, comparables that can be transposed to the context of the transaction.

In the application of prospective methods, we deal with the following criteria:

The software and its technical and functional aspects :

  The asset nature

Application, enterprise software, SaaS, off-the-shelf software …

—  The programming languages

The programming languages ​​used, the architecture

   Development costs

Development costs and associated resources

   The features

The features offered by the software as it is

   Coding quality

Coding quality. Compliance with various standards or compatibility with other softwares and frameworks

  Updates

The number and frequency of versions edited to date

  Ratio

The old / new code ratio

  Quantitative indicators

Quantitative indicators : number of lines of code, modules, bugs, users, etc.

—  Lifetime

The potential remaining lifetime of the software

The mode of protection of rights and the strength of this protection (barriers to entry) :

  Protection in force (copyright, patent, trademark …), quality, seniority, geographical area where the protection is in force, strength against the risk of counterfeiting and copy

—  Presence of the original developers ?

The market :

  Who are the companies and products directly or indirectly competitors ?

  What are the main differentiation axes ?

  What is the business model ?

  Marketing strategy (pricing policy, distribution, market segmentation, communication)

  Market Share…

The expected revenues for the remaining lifetime, and associated margins :

  Past sales (direct, maintenance, licenses …)

  Pricing policy

  Estimated remaining lifetime

  Estimate of future sales (volumes)

  Speed ​​and mode of penetration of the market

  Sales curve

  Associated costs (direct and indirect, such as maintenance)

Operational risks and ratios, increasing or decreasing the value :

  Contribution of the software rights to the margin

  Devaluation of existing code in future releases

  Risks of copying, counterfeiting, litigation

  Loyalty of the team of developers, hotline, maintenance

  Usual risks related to the operation

Once these points have been addressed, we apply our hypotheses according to different prospective scenarios in order to approach a range of value of the digital solution.

Finally, we send our clients the results of our analysis, our recommendations, the financial valuation methods we used and the quantified conclusions we came to. This is a comprehensive strategic resulting document to support and document our clients’ operations.

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