Valuing IP
Produced in partnership with Anne Fairpo of 13 Old Square Chambers and Atlas Chambers
Valuing IP

The following IP guidance note Produced in partnership with Anne Fairpo of 13 Old Square Chambers and Atlas Chambers provides comprehensive and up to date legal information covering:

  • Valuing IP
  • Introduction
  • Approaches
  • Comparison approach
  • Income approach
  • Cost approach


Valuation is required at many points in the lifecycle of an intellectual property (IP) asset, and for many different purposes, including:

  1. sale and purchase of a business (including mergers), either on the sale of shares or on the sale of the trade and assets of a business

  2. sale and purchase of the IP (to establish an appropriate price and to deal with accounting matters)

  3. litigation settlements/awards (to establish appropriate compensation)

  4. insolvency (to establish the value of the assets of the insolvent business)

  5. financial reporting requirements (for example, to confirm the current value of IP on the balance sheet)

  6. tax requirements (on sale and purchase, particularly where the seller and purchaser are related in some way)

In general, the principal aim of the valuation exercise will be to establish the market value of the IP by considering a hypothetical transaction. The way in which this is done can vary: there is no one single method for valuing IP. There are various methods and it will be necessary to consider which is the most appropriate in each case—usually this would be the method that most closely matches the circumstances of the hypothetical transaction.

The market value of a single intellectual property will (usually) ignore owner-specific information, such as synergies from other intellectual property or other assets which could increase the value of