Valuation Methods — Lesson 6 of 10
The market approach is the most instinctive valuation technique: an asset is worth what someone will pay for it. In real estate, this principle works reliably because thousands of comparable properties trade every month. In public equities, market prices are observable in real time. For intangible assets, the market approach is appealing in theory but constrained in practice — because intangible assets are, by definition, unique.
No two patent portfolios cover the same claims. No two customer databases contain the same records. No two brands carry the same associations. This uniqueness makes direct comparisons difficult. But it does not make the market approach irrelevant. When comparable data exists — from licensing agreements, IP auctions, technology transfer deals, or domain name sales — the market approach can provide the strongest evidence of value precisely because it reflects what real buyers actually pay.
This lesson explains where to find comparable data, how to make adjustments for differences, and when the market approach provides reliable evidence versus when it should serve only as a cross-check.
The market approach values an intangible asset by reference to prices paid for comparable assets in arm's-length transactions. Its strength is objectivity — it reflects actual market behaviour. Its limitation is comparability — intangible assets are inherently unique, so adjustments are always required. The approach works best for assets with active licensing or trading markets.
Where to Find Comparable Data
The availability of comparable transaction data varies enormously by asset type.
Comparable Data Sources by Asset Type
| Asset Type | Data Source | Data Quality | Coverage |
|---|---|---|---|
| Patents / technology | RoyaltyStat, ktMINE, Innography | High | Licensing agreements across industries |
| Pharmaceutical IP | PharmaDeals, Evaluate Pharma | High | Drug licensing and co-development deals |
| Domain names | NameBio, DN Journal, Sedo | High | Millions of domain sale records |
| Content / media rights | MUSO, PRS for Music | Moderate | Licensing rates for content categories |
| Brands / trademarks | Brand Finance, Interbrand | Moderate | Publicly ranked brands only |
| Customer databases | Limited | Low | Rarely traded independently |
| Software | Limited | Low | Typically embedded in M&A, not standalone |
Types of Market Evidence
The market approach uses two types of evidence, each suited to different contexts.
1. Comparable Transactions (Direct Sales)
This involves identifying transactions where similar intangible assets were sold or transferred between unrelated parties, and deriving value from the transaction price.
Application: Domain name valuation, patent portfolio sales, content library acquisitions.
Strength: Direct evidence of what buyers pay. No model risk.
Limitation: Transactions must be truly comparable. A $1 million domain name sale for "insurance.com" is not a comparable for "nicheproduct.co.uk" — the traffic, revenue, and strategic value are incomparable.