Often based on patented, therefore protected from anyone else making similar
Negotiated price that can be influenced by ability to replicate, i.e. if I can replicate for less than buying unprotected rights
Rare to sell at a fixed price, usually a royalty as used – costing there to be a decline in financial performance of the company (License agreement should strive at sharing profit – ¼ – 1/3 to licensor)
Price can be based on the IP future revolutionizing the original (think taking a patented propeller that takes one forward and then adding a new device that makes it also go up)
“In some professional sectors there is little or no tradition for acquiring IPR. People would rather develop something else themselves or even infringe to get a reasonable price.”
As Example – Custom Designs
The patterns are not patented and likely would be difficult and costly to patent.
If thousands of patterns, on average, each is not often used
The cost of licensing/royalty fee, will drive down profitability and lessen income value of the business.
If only a few are used a year, the income from licensing/royalty fee may be minimal compared to selling the business.
If included in the purchase price as part of the assets, it increases the value of the company but buyer perspective of cash flow, after inclusion, has to be recognized and will limit what a buyer is willing to pay for the business including the IP.
If frequently used, though random, they can/should be included in the sale with some value associated with them.
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