From Boardroom to Courtroom: Using @RISK to Value Early-Stage Companies

pellegrino_associatesIntellectual property (IP) is one of the most valuable assets early stage companies own, and one of the many challenges faced by these companies with no assets other than untested technology is how to determine a fair market value for their IP should they face a civil lawsuit.  IP makes a huge contribution to local, national and global economies. Businesses rely on the enforcement of their IP, e.g. patents, trademarks and copyrights, while consumers use IP to ensure they are purchasing safe, guaranteed products. This is why it is important for organizations to protect and understand the value of intellectual property.

Pellegrino & Associates, a boutique valuation company with a specialty in software and IP, uses Palisade’s @RISK software to run Monte Carlo simulations for their risk analysis and to calculate fair IP values, based on discounted future incomes. The method is detailed in the book BVR’s Guide to Intellectual Property Valuation, by Michael Pellegrino, a leading expert in IP valuation.

“We’ve used it on more than 300 client engagements in every major sector of the economy, from software and semiconductors to chemical coatings and consumer electronics,” said Pellegrino. “We apply it to a range of damages models including the assessed value of a product, reasonable royalty payments, total cost of product reproduction, as well as the potential for lost profits – and in all the cases that went to court where we used Monte Carlo simulation, our results were accepted every time.”

» Read the full case study
» Learn more about @RISK
» Pellegrino & Associates
» BVR’s Guide to Intellectual Property Valuation