Valuation of nascent technology

Nascent technology is typically valued using the cost approach. However, where the nascent technology is patentable, the cost approach does not account for value subsisting in the “monopoly rights”, and consequently grossly undervalues the intellectual property (IP).

One must therefore be mindful of other more appropriate valuation methodologies (apart from the cost and replacement cost approaches) when valuing such IP. In many instances, a probability tree valuation, Monte Carlo or real options pricing model may prove more appropriate.

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