August 15, 2011With all the recent press surrounding the purchasing of patents I thought it would be useful to summarize the methods for calculating the value of these transactions and attempt to show a framework around rational valuations. Of course, in reality the market for patent purchases doesn't always work rationally. But by leveraging the market and financial research techniques and the fundamental valuation techniques I applied as an analyst in the investment banking industry as well as my experience through the boom and bust years of the dot com era, I hope to provide not only some pragmatic insight, but also a perspective on when valuations leave the rational framework. Ultimately each patent valuation analysis is unique and, similar to corporate valuations must typically include detailed market and financial research beyond the summaries presented below.
