IP and Intangible Assets Valuation
With more than 35 years of experience, Appraisal Economics is an independent valuation firm specializing in IP appraisal and intangible assets valuation across virtually every industry. We appraise the full spectrum of intangible assets, from trademarks and patents to customer relationships, software, and emerging asset classes like Name, Image, and Likeness. We produce defensible, accurate reports for transactions, compliance, litigation, and financial reporting.
Because businesses are often worth far more than the sum of their hard assets and working capital, intangible assets frequently represent the most significant portion of enterprise value. According to Ocean Tomo’s Intangible Asset Market Value Study, intangible assets now account for approximately 92% of the market capitalization of S&P 500 companies, up from just 17% in 1975. Identifying, classifying, and accurately valuing these assets is central to understanding what a business is actually worth.
When Is an IP or Intangible Assets Valuation Required?
The need for an intangible assets appraisal arises across a range of legal, financial, and regulatory contexts. The most common triggers include:
Purchase price allocation (PPA): Under ASC 805 (Business Combinations), when a business is acquired, the purchase price must be allocated across all identifiable assets and liabilities, including intangibles. This is one of the most frequent drivers of intangible asset valuation engagements.
Impairment testing: ASC 350 requires companies to test goodwill and indefinite-lived intangible assets for impairment at least annually. A credible, independent valuation is essential to satisfy auditors and regulators.
Estate and gift tax compliance: When intangible assets are transferred at death, IRC Section 2031 requires that the full gross estate, including IP portfolios, franchise rights, and proprietary technology, be valued at fair market value. When such assets are transferred by gift, IRC Section 2512 establishes the same fair market value standard. IRS scrutiny on these valuations is high, and defensibility matters.
Litigation and IP disputes: IP valuation is frequently required in infringement cases, breach of contract disputes, partnership dissolutions, and divorce proceedings involving business interests. Appraisal Economics provides expert witness testimony in litigation, and our reports are built to hold up under cross-examination.
Licensing and royalty rate-setting: Establishing an arm’s-length royalty rate for a trademark, patent, or technology license requires a rigorous valuation methodology. This applies both to domestic licensing and to transfer pricing in intercompany arrangements.
IP-backed financing: Sophisticated lenders increasingly accept intangible assets as collateral. Appraisals are required to establish the lending value of these assets.
Bankruptcy and restructuring: In distressed situations, intangible assets must be valued to support reorganization plans, asset sales, or creditor negotiations.
Types of Intangible Assets We Appraise
Intangible assets span a wide range of categories. We appraise all of the following:
Marketing-Related Intangibles
Trademarks, trade names, and service marks are the identifiers that carry brand equity and customer recognition. Trademark valuation is among the most requested engagements we handle, particularly in the context of acquisitions and licensing arrangements.
Technology-Related Intangibles
This category includes patents, unpatented proprietary technology, trade secrets, and software. Patent valuation is highly fact-specific, requiring a deep understanding of both the technology itself and the commercial context in which it operates.
Customer-Related Intangibles
This category includes customer lists, customer relationships, order backlogs, and contracts. These assets are often the most economically significant component of a service business or distribution company, yet they are frequently undervalued in informal assessments.
Artistic and Creative Works
Copyright valuation covers literary works, music, film, and other creative properties. We also appraise NIL appraisals (Name, Image, and Likeness rights), an emerging and complex asset class with growing relevance in collegiate athletics, entertainment, and brand licensing.
Workforce and Organizational Intangibles
Trained and assembled workforces, non-compete agreements, favorable financing arrangements, leasehold interests, in-process R&D, and databases.
How Intangible Assets Are Valued
There is no single method for intangible asset valuation. The appropriate approach depends on the type of asset, the purpose of the appraisal, and the available data. Our team selects and weights methodologies based on the specific engagement, drawing from three standard frameworks.
The income approach is the most widely used framework for intangible assets. It estimates value based on the economic benefits the asset is expected to generate. Within this approach, the Relief from Royalty method is a hybrid of the income and market approaches that estimates value by calculating the royalty payments the owner avoids by holding the asset rather than licensing it. It is widely used for trademarks and patents where comparable licensing data is available.
The Multi-Period Excess Earnings Method (MPEEM) isolates the cash flows attributable specifically to the subject intangible, net of contributory asset charges, and is most commonly applied to customer relationships. The With-and-Without Method compares the value of the business with the intangible asset in place versus without it, making it useful for non-compete agreements and certain contracts.
The market approach derives value from observed transactions involving comparable intangible assets, requiring access to reliable transaction databases and sound judgment in selecting and adjusting comparables.
The cost approach estimates the cost to reproduce or replace the asset and is most applicable to assembled workforces, software, and databases where an earnings-based approach is less reliable.
All Appraisal Economics engagements are conducted in accordance with USPAP (Uniform Standards of Professional Appraisal Practice) and the relevant financial reporting standards, including ASC 805 and ASC 350.
Who Needs Intangible Asset Valuation Services
Attorneys and CPAs: Counsel and advisors rely on independent intangible asset appraisals for estate and gift tax filings, litigation support, and post-acquisition financial reporting. Our reports are written to withstand IRS challenge and legal scrutiny, which protects both your client and your practice.
Corporate finance and M&A teams: Purchase price allocations require a rigorous, auditor-ready assessment of all acquired intangibles. We work directly with deal teams and their auditors to produce PPA reports that meet ASC 805 requirements without disrupting deal timelines.
Private equity firms: Portfolio companies often carry significant intangible value that needs to be captured accurately at acquisition, tested annually for impairment, and reported at exit. We provide recurring valuation support across the fund lifecycle.
Business owners: Whether preparing for a sale, structuring a licensing agreement, or responding to a tax compliance event, business owners need a clear, accurate picture of what their intangible assets are worth. We make the process straightforward and produce a report that serves its intended purpose.
High-net-worth families and estate planning advisors: IP portfolios, franchise rights, and other intangibles held within estates require defensible fair market value appraisals. We handle complex, multi-asset situations and coordinate with the full advisory team.
Why Independence Matters in Intangible Asset Valuation
IP valuation, in particular, is an area where conflicts of interest are not hypothetical. When a firm that advised on a transaction is also asked to value the intangible assets acquired in that transaction, the independence of the valuation is compromised. Auditors, the IRS, and opposing counsel know it.
Appraisal Economics is a pure-play valuation firm. We have no audit relationships to protect, no investment banking mandates that create competing interests, and no advisory work that could color our conclusions. Our only product is the accuracy and defensibility of our appraisals.
This independence is not incidental. It is the reason the IRS engages Appraisal Economics to review and critique third-party appraisal reports it disputes, and to serve as expert witnesses in contested matters. When an appraisal has to hold up under the most adversarial scrutiny possible, the firm behind it cannot have divided loyalties.
Work With a Firm Built Entirely Around Valuation
Intangible assets are among the most technically demanding assets to appraise. They require the right methodologies, current market data, and the judgment that comes from handling a high volume of complex engagements across industries and asset types.
Our team includes CFAs, ASAs, CPAs, economists, and finance professors, several of whom have co-authored textbooks on valuation. We stay current with evolving standards, including developments in ASC 805, ASC 350, and transfer pricing, and we apply that knowledge directly to each engagement.
If you need an intangible assets valuation or IP appraisal, contact Appraisal Economics to discuss your situation. We work with clients nationwide.