Why You Should Value Intellectual Property Valuation

Attorneys are often asked to evaluate intellectual property or IP assets. There are many reasons why you may want to consider this. If you are an IP asset owner or a company with control over IP assets, valuations can be important information to have in your possession.

This quick guide will provide you with information on why you should consider having your intellectual property valued professionally and reasons to value intellectual property.

Transactions of Intellectual Property

One of the most common reasons people wish to have their intellectual property valued is for transactional purposes. The owners of IP assets want to ensure that they are paid fairly during transactions involving these assets. It is often difficult to value the IP assets on your own. This is why legal professionals and experts are called in to assist.


Many people do not realize that IP assets can even be used as collateral in either cash flow based or asset based financing. Just like physical collateral can give an individual stronger borrowing power, so can IP assets. These assets are an assessment of earning potential for the future.

Tax Planning

It is also important to have IP assets evaluated so that you can prepare for taxes and compliance. There are many different types of IP valuation requirements when it comes to tax planning. IP appraisals are often necessary when performing an income tax basis purchase. The appraisal can also be used to quantify the amount of an amortization deduction as well.

Regulatory and Corporate

There are also some industries that are subject to more regulatory compliance requirements. In these industries, there is more need for IP asset valuations. Healthcare is one such example.

Financial Reporting

Intellectual property valuations are an essential part of preparing for acquisition accounting allocations. This would be among tangible and intangible assets. When there is testing for goodwill impairment under fair value reporting standards, having professionally done IP asset valuations will be very important.

Litigation and Expert Witness Testimony

There are even instances in which IP assets can be used as part of expert witness testimony. This is usually when calculating reasonable royalty or other economic damage claims. The only way to measure lost profits of IP assets would be to have pre-existing valuations on hand to use in court.

If you are in need of determining the value of your intellectual property, reach out to legal experts in your area.