When it comes time to part ways between business partners, there may be a lot of heartache in the process. There might be an even more complicated asset division as well. Whether the split is strictly business or an overwhelming process, it is important to understand how to evaluate your business assets—including the non-tangible assets like intellectual property.
The value of the intellectual property comes from its exclusivity. Your logos, blueprints and trade secrets are yours. They provide value to your business and no one without permission may use them. According to the World Intellectual Property Organization, there are three common ways to value these assets.
The income method
Evaluators compare your IP asset against the economic income they expect it to generate. This is useful when your IP already has a positive cash flow to help predict future gains.
The market method
Some IP assets are more alike than others and when there is precedence for a transfer of rights for similar IP assets in comparable market circumstances, evaluators may reference those to determine value.
The cost method
Another way to establish a value is by determining how easily reproduced that IP asset is. Whether it be design or logo costs or manufacturing fees, this sum helps determine the production cost when the economic benefits are not easily quantified.
Navigating your IP transfer
Your business is important to you and when you face the prospect of dividing it up between a breakup with a partner, it is important to secure the right amount of value from your intellectual property. There are dispute resolution resources available if you find the transfer deal at a standstill.