The European Commission appointed a panel of European intellectual property (IP) valuation experts whose tasks included reviewing the valuation methods for IP and their use, identifying bottlenecks in these methods for the purpose of a company’s financial reporting, access to finance and litigation, identifying good practices and recommending policy actions.
According to this report, “the Expert Group has demonstrated that it is not the lack of valuation methods per se, or even standards for valuing IP that are missing, but rather other barriers that are having a greater influence on business and lenders.” As a consequence, the Expert Group proposes four main policy actions to reduce the identified barriers:
- Establishing a data source containing information for use by valuation professionals, as a way to enhance credibility of valuations by improving data and available information on IP transactions,
- Creating an organization to oversee IP valuation practice as a way to increase confidence in the quality of valuations being performed and to ensure that valuations are in line with generally accepted principles and standards,
- Introducing a risk sharing scheme for banks to facilitate IP secured lending to innovative companies, especially SMEs,
- Introducing an additional reporting section for intangible assets and IP that would increase the transparency of IP value within company accounts, providing important information to lenders, investors and stakeholders.
To read the full report, click here.
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