Book Review
| Pages | 83 |
| Publication year | 2021 |
70 CBJ 83. BOOK REVIEW
VALUATION OF INTELLECTUAL PROPERTY AND INTANGIBLE Assets (Second Edition), Gordon V Smith and Russell L. Parr; John Wiley & Sons, New York, 1994. 515 pages, $125.00. 1996 Supplement Available.
Over the past two decades, the large volume of mergers, acquisitions and spinoffs has generated a great deal of activity for lawyers and a significant amount of guesswork on the part of lawyers with respect to the valuation of intangible assets involved in such transactions. The authors recognized the need to provide some "science" to the evaluation of intellectual property and intangible assets in 1989 when they created their first edition of this work, and they stimulated and welcomed input from others. As a result, the authors indicate they received useful information and comments from attorneys who were attempting to evaluate intellectual property and intangible assets, and their new edition includes information received from other lawyers and also reflects their recognition that greater clarification and more guidelines were required.
As one who has repeatedly been asked to evaluate patents, trademarks, copyrights and trade secrets in terms of their value to a company being acquired or being offered for sale, I had found their first edition to be useful. It stimulated consideration of various options for attempting to value technology and trademarks, and gave me solace in that I felt I was not alone in recognizing that such valuation was more of an art than a science.
Frequently, the intellectual property is reflected by a relatively small value on the books of a company. Much research and development costs can be expensed or rapidly depreciated, and a large amount of the investment in creating the image and goodwill of the company by years of effort fails to produce any line item of any significance. One item which they also discuss and which I have frequently failed to consider in my own valuations is the value of a strong distribution or sales network; it fails to have any recognized place on the balance sheet.
In their new edition, the authors discuss a number of different approaches to the valuation of intellectual property and other intangible assets including variations on the widely employed
market and cost approaches. They analyze the income approach which is the most commonly employed...
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