Both RFR and MPEEM are income-approach valuation methods widely used in purchase price allocation. RFR estimates value based on hypothetical royalty savings, while MPEEM isolates the excess earnings attributable to a specific intangible asset after deducting returns on all contributory assets.
Valuation Method
Relief from Royalty vs Multi-Period Excess Earnings
When to use RFR vs MPEEM for intangible asset valuation. Key differences in methodology, data requirements, and suitable asset types.
| Criteria | Relief from Royalty (RFR) | Multi-Period Excess Earnings (MPEEM) |
|---|---|---|
| Best suited for | IP with licensing analogues (patents, trademarks, technology) | Primary income-generating assets (customer relationships) |
| Data requirements | Royalty rate benchmarks, revenue projections | Multi-period cash flow projections, contributory asset returns |
| Complexity | Moderate — requires comparable royalty data | High — requires identification and return on all contributory assets |
| Regulatory acceptance | Widely accepted for technology, brand, and patent valuations | Preferred for customer relationships and primary intangible assets |
| Key risk | Royalty rate selection subjectivity | Contributory asset charge assumptions |
| Typical asset types | Trademarks, patents, developed technology, trade names | Customer relationships, non-compete agreements, order backlog |
When to Use Each Approach
Relief from Royalty (RFR)
- Asset has observable licensing comparables
- Brand or technology with clear royalty savings
- Licensing transactions exist in the industry
- You need a relatively straightforward income-based approach
Multi-Period Excess Earnings (MPEEM)
- Asset is the primary driver of business cash flows
- Customer relationships or similar non-licensable assets
- No reliable royalty rate benchmarks exist
- Asset generates identifiable excess earnings beyond contributory asset returns
Our Verdict
Use RFR when royalty rate benchmarks exist (common for technology and brand valuations). Use MPEEM when the asset is the primary income driver and licensing comparables are unavailable — most frequently for customer relationships in purchase price allocations.
Related Glossary Terms
Learn More
Ready to Value Your Intangible Assets?
Use Opagio's valuation tools to apply these methods to your own business.