A buyer, investor or lender will put a number on your patents, brand and software. This hub explains how that number is reached: the three approaches valuers use, how each kind of intellectual property is treated, when a valuation is needed and who in the UK carries it out. It is written for owners preparing to sell, raise or borrow, and each section links to a detailed guide.
Definition
IP valuation estimates what a piece of intellectual property, such as a patent, trade mark, copyright, design, software or know-how, is worth for a stated purpose on a stated date. Valuers use the three approaches in IVS 210: income (relief from royalty, MPEEM, with-and-without), market and cost.
The same patent can carry several defensible values, because the purpose of the valuation sets the basis of value. A purchase price allocation measures fair value under IFRS 13, the price the IP would fetch if sold to a market participant. A negotiated sale is usually framed in market value as the International Valuation Standards define it, and investment value is the worth to one particular owner or buyer. A lender asks what the IP would fetch if sold after a default, usually a liquidation value assuming an orderly disposal, which is lower again; see IP valuation for lending.
The valuation date and the unit of account, one patent or the whole portfolio, also shape the answer. Legal strength is not value: a granted patent covering a product nobody buys is worth little.
Nor do the accounts show it. IAS 38 and FRS 102 Section 18 prohibit recognising internally generated brands and allow only qualifying development costs to be capitalised (under FRS 102, only by policy choice), so home-grown IP is carried at little or nothing until a buyer recognises it at fair value in its consolidated accounts. That fair value often includes a tax amortisation benefit, an assumption inside the measurement, not tax relief: after a UK share purchase, the step-up recognised on consolidation gets none.
IVS 210, the international standard for valuing intangible assets, groups the methods into three approaches: income, market and cost. The evidence usually decides which leads: comparable licences support relief from royalty, profit forecasts support excess earnings or with-and-without, and development records support the cost approach. A careful valuer cross-checks the result with a second method.
The income approach values IP by the economic benefit it produces, discounted to today.
Relief from royalty asks what the owner would pay to license the IP if it did not own it: protected revenue times an arm's-length royalty rate, less tax, discounted over the remaining life. It usually leads for brands, trade marks, patents and software, and it stands or falls on the evidence for the rate; see royalty rate benchmarking.
MPEEM, the multi-period excess earnings method, forecasts the cash flows of the asset a business is built around, then deducts contributory asset charges, a fair return on every other asset that helps earn them. It suits the primary technology or customer asset.
With-and-without compares the business's cash flows with the asset and without it. IVS 210 groups the premium profit method, the extra profit from a higher price or volume, alongside it. Between them they suit non-competes, process know-how and price-premium products. IVS 210 also names the greenfield method, which models a business built from scratch around the asset.
The market approach values IP by what comparable rights sold or licensed for. For a single patent or brand, true comparables are scarce: each right is unique, and sale prices are rarely published or are buried in the price of a whole business. Royalty rates from comparable licences are the market evidence valuers use most, so the market approach usually feeds relief from royalty rather than standing alone.
The cost approach values IP at what it would cost to recreate it (reproduction cost) or to obtain the same utility (replacement cost), less obsolescence. It fits early-stage technology, in-house software and designs with no separate income yet. For a successful asset it is usually a floor, since what an invention cost bears no fixed relationship to what it earns; for one that earns nothing, it can overstate value.
| Method | Approach | Best for | Key evidence | Read more |
|---|---|---|---|---|
| Relief from royalty (RFR) | Income | Brands, trade marks, patents, licensable software | Comparable licences, protected revenue, remaining life | Royalty rate benchmarking |
| Multi-period excess earnings (MPEEM) | Income | The asset the business is built around: core technology or customer relationships | Cash-flow forecast, contributory asset charges | How to value a patent |
| With-and-without, including premium profit | Income | Non-competes, process know-how, price-premium products | Forecasts with and without the asset, price premium over a generic equivalent | Brand valuation |
| Comparable sales and licences | Market | A cross-check where comparable transactions are disclosed | Disclosed sale prices, licence terms | Patent valuation |
| Reproduction or replacement cost | Cost | Early-stage technology, in-house software, designs | Development records, time logs, rebuild estimates | Designs: the cost approach |
Valuers rarely rely on one method: the usual pattern is a lead method, a cross-check and, where useful, a cost floor. The full methods guide sets out each in more detail.
A UK patent lasts up to 20 years from filing, if renewal fees are paid each year from the fourth anniversary (Patents Act 1977, section 25), so its value is the cash advantage that exclusivity protects over the years left, and nothing after expiry. Relief from royalty usually leads; MPEEM fits a patent the business is built on, and the cost savings method a process patent that cuts cost. Claim breadth, renewals, validity and licensing evidence move the number.
The registration protects the name; the value lies in the brand's price premium and loyalty. A UKIPO registration lasts ten years and can be renewed indefinitely, so a strong brand can carry a terminal value that a patent cannot. Relief from royalty usually leads, with premium profit as a cross-check where a generic comparator exists. Buyers check that the company, not a founder, owns the registration.
Copyright arises automatically in the UK, with no register, so ownership rests on the chain of title. Software is protected as a literary work. The company owns code its employees write in the course of employment, but a contractor owns the copyright in its code unless it is assigned in writing. Relief from royalty suits licensed works; the cost approach suits internal systems with no separate income.
A registered design protects the appearance of a product; UKIPO registration can be renewed every five years for up to 25 years. Unregistered design right protects the shape or configuration of an article for at most 15 years, without any filing. Designs rarely earn income that can be separated from the product, so the cost approach is common, with relief from royalty where a design is licensed.
Nothing is registered, so the value depends on evidence: that the information is secret, has commercial value because it is secret, and is protected by reasonable steps such as confidentiality agreements and access controls, the tests in the Trade Secrets (Enforcement, etc.) Regulations 2018. With-and-without or MPEEM usually leads. Lenders rarely accept trade secrets as primary collateral, so know-how adds more to a sale than to a loan.
A buyer recognises the target's identifiable intangibles at fair value in its purchase price allocation. IFRS 3 accepts an intangible that is separable or arises from contractual or legal rights; FRS 102 (paragraph 18.8) requires both, unless the buyer has chosen a policy of recognising those that meet one. A seller that has valued its IP first negotiates from the same evidence.
A lender asks what the IP would fetch if it had to be sold after a default, not what it is worth to you. In England and Wales, NatWest lends from £250,000 up to 50% of the IP's value as assessed by an independent valuer. The Royal Bank of Scotland launched an IP-backed product in Scotland in June 2026.
A licence needs a royalty both sides can defend. The rate is benchmarked from comparable arm's-length licences, adjusted for exclusivity, territory and the strength of the right, then tested against the profit the licensee expects to earn. The same evidence feeds relief from royalty when the IP is valued.
Transferring or licensing IP within a group, especially across borders, can require an arm's-length price for tax, under Part 4 of the Taxation (International and Other Provisions) Act 2010 read with chapter VI of the OECD Transfer Pricing Guidelines. Small and medium-sized groups are largely exempt, except for dealings with some overseas territories. This is a pointer, not tax advice.
When a patent is infringed, the owner can claim damages or, at its election, an account of the infringer's profits (Patents Act 1977, section 61). Damages often include a reasonable royalty on infringing sales the owner would not have made itself, which rests on the same evidence as relief from royalty.
An audit establishes what the business owns before anyone values it: which rights exist, who legally holds them, whether they are registered and renewed, and which licences and charges attach to them. Valuing a right the company does not own wastes the fee, so audit first, then value.
Who you need depends on why you need the number.
Whoever you instruct, ask the report for four things: the basis of value, the valuation date, the method and why it was chosen, and the evidence behind the royalty rate or cash flows. Our answer on valuing IP for secured lending covers what a credit committee expects.
What drives a patent's value, the four methods valuers use, and a relief from royalty calculation worked line by line.
Read the guide →Cost, market, income and relief from royalty matched to purpose, with worked UK examples and the lender's view.
Read the guide →How registered marks are valued in a purchase price allocation, using relief from royalty, its key inputs and common pitfalls.
Read the guide →Relief from royalty worked through to fair value, the other methods, and when a brand reaches the balance sheet.
Read the guide →Where comparable licences come from, how to screen and adjust them, and how to test the rate you select.
Read the guide →Why a lending valuation differs from a sale valuation, the methods lenders accept and what the report must contain.
Read the guide →How to establish what the business owns, and can prove it owns, before anyone values it.
Read the guide →IP valuation estimates what a piece of intellectual property, such as a patent, trade mark, copyright, design, software or know-how, is worth for a stated purpose on a stated date. Valuers use the three approaches in IVS 210: income (relief from royalty, MPEEM, with-and-without), market and cost.
You value intellectual property with the method its evidence supports: relief from royalty where comparable licences exist, excess earnings or with-and-without where the asset drives profit, and cost where no income can be attributed. First confirm what the business owns and why the figure is needed, because the purpose sets the basis of value. Cross-check with a second method and record every assumption.
IVS 210 groups them into three approaches. The income approach includes relief from royalty, the multi-period excess earnings method (MPEEM), with-and-without (with premium profit) and greenfield. The market approach uses comparable sales and licences. The cost approach uses reproduction or replacement cost, less obsolescence. Relief from royalty is the most widely used for brands, trade marks and patents.
Most often when a business is sold, because the buyer recognises the acquired IP at fair value in its purchase price allocation. Other occasions are borrowing against IP, licensing it, transferring it within a group for tax, infringement disputes, and planning before any of these. Each purpose can produce a different figure for the same asset.
RICS Registered Valuers, corporate-finance and accountancy valuation teams, and specialist IP valuation firms all value IP in the UK. No single licensing regime covers IP valuers, so whoever relies on the figure decides whose valuation to accept; some lenders and regulated purposes ask for a Red Book valuation. Patent and trade mark attorneys assess the strength of rights, not their value.
Intellectual Property (IP) · IVS 210 (Intangible Assets) · Relief-from-Royalty Method · Multi-Period Excess Earnings Method (MPEEM) · With-and-Without Method · Royalty Rate · Patents · Trademarks
A buyer will value your patents, brand and software in its purchase price allocation. Valuing them first, on your own evidence, lets you negotiate from the same numbers.
Value every intangible asset with RFR, MPEEM, W&W — inside Opagio Intangibles.
Preparing to sell? See exit readiness · Or start with the Sell Your Business guide