DETERMINATION OF A SPECIFIC RISK- ADJUSTMENT RATE FOR INTELLECTUAL PROPERTY VALUATION ACCORDING TO TECHNOLOGY READINESS LEVEL
DOI:
https://doi.org/10.21837/pm.v24i40.1966Keywords:
Intellectual Properties, Technology Readiness Level, Specific Risk-Adjustment Rate, Weighted Average Cost of CapitalAbstract
Intellectual property (IP) valuation is recognized as one of the knowledge that valuers need to explore as a new opportunity in diversifying valuation services. However, IP's intangible nature, unfamiliarity with specific risk allocations, unique IP characteristics and future uncertainty of IP growth make it challenging to allocate specific risks to ensure valuation reflects true economic fair value as IP risks differ by IP category and technology readiness level (TRL) level. Therefore, through relief from the royalty method, the study of the specific risk-adjustment rate (SRAR) framework to build a rubric that facilitates appraisers. The aim of the research is to determine the approach for establishing the element of potential and risk associated with the classification of IP. Through content analysis, this study successfully assesses associated risks by mapping methodology towards the assessment of the potential risk associated with the classification of IP and risk assessment according to the TRL level. Introducing this SRAR rubric will familiarize valuing IP among member firms and allow valuers to diversify their valuation service. IP is evaluated as a future backup collateral value for corporate financing.
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