License Analogy Method

Market Comparison

This method requires finding comparable transactions and adjusting the royalty rates for differences in technology, market size, and exclusivity. The resulting rate is then applied to the projected revenues of the company to calculate the hypothetical royalty stream. This calculation provides an objective basis for the asset’s value.

Statutory Application

In countries like Germany, this method is the preferred way to calculate inventor compensation under statutory rules. The calculated royalty stream is adjusted by the inventor’s position factor to determine the final award. This use makes the method a standard tool for corporate legal teams.

Value Defensibility

Using this methodology provides a highly defensible valuation that stands up to scrutiny from tax authorities and investors. It relies on real-world market data rather than subjective estimates, which increases the credibility of the valuation. This approach is essential for securing favorable terms in transactions.