Normalised Earnings

Cash flow adjusted to remove non-recurring, extraordinary, or owner-specific items to reflect the sustainable earnings capacity of a business under normal operating conditions. Normalisation adjustments commonly include removing one-time restructuring charges, above-market owner compensation, related-party transactions, and non-operating income.

An income approach valuation technique that values a primary intangible asset by isolating the cash flows attributable to it after deducting fair returns on all other contributory assets. MPEEM is the most commonly used method for valuing customer relationships in purchase price allocations under IFRS 3 and ASC 805.

A valuation technique used to isolate the value of a specific intangible asset by deducting the returns attributable to all other assets (tangible and intangible) from total earnings. The multi-period excess earnings method is the most common approach for valuing customer relationships and technology in purchase price allocations.

A modified version of EBITDA that strips out non-recurring, irregular, or non-cash items to present a clearer picture of ongoing operational performance. Adjusted EBITDA is commonly used in growth-stage company valuations where standard EBITDA may be distorted by one-off charges or share-based compensation.

A market approach valuation technique that estimates the value of a subject company by reference to the trading multiples of publicly listed companies with similar business characteristics. The method involves identifying comparable public companies, selecting appropriate valuation multiples (such as EV/EBITDA or P/E), making adjustments for differences in size, growth, risk, and marketability, and applying the adjusted multiples to the subject company's financial metrics.

The process of modifying an observed equity beta to better reflect the risk characteristics of the subject company being valued. Common adjustments include unlevering betas from comparable public companies to remove the effect of different capital structures, relevering to the subject company's target capital structure, and applying the Blume or Vasicek adjustment to account for beta's tendency to regress toward 1.0 over time.

An intangible investment — R&D, brand-build, customer-acquisition with measurable payback, software development — that has been moved from operating expense to balance-sheet asset and amortised over its useful life under management accounting. Statutory accounting rarely permits the same treatment for internally-generated intangibles: IAS 38 imposes six conservatism criteria that are difficult to meet in practice; ASC 730 forces immediate expensing under US GAAP.

A reconciliation document that maps founder-reported EBITDA to a Fund's maintainable EBITDA, identifying each adjustment per IPEV Section 3.4 with documented evidence. The bridge typically traces non-recurring spend, discontinued lines, one-time items, founder compensation normalisation, and pro-forma adjustments — each with source documentation (board minutes, contracts, payroll) and the known-and-knowable evidence flag.

How to Value a Patent: 4 Methods + IP-Lending Context

Most patent valuation questions collapse into one of four canonical methods — cost, market, income/DCF, and relief from royalty — and the choice between them is governed by purpose. This guide sets out which method fits which question, the inputs each requires, the defensibility each produces, and how UK IP-backed lenders read the resulting number.

What is EBITDA and why does it matter for valuation?

EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) strips out financing and accounting decisions to show a company's core operational profitability — it's the most common valuation metric in M&A.

How is the Rule of 40 calculated and when does it apply?

The Rule of 40 states that a healthy SaaS company's revenue growth rate plus profit margin should exceed 40% — it applies primarily to SaaS companies at scale and is used by investors to assess growth-profitability balance.

How does the Asset Valuator in Opagio Intangibles work?

The Asset Valuator in Opagio Intangibles values one asset at a time. You choose a method, such as Relief from Royalty, MPEEM or the Cost Approach, enter its inputs, and it calculates a fair value estimate.