Financing & Valuation of innovation

Valuation of technology licenses

The market for technology has seen an unprecedented growth over the last decades. Yet, empirical studies suggest that the development of the market for technology licenses is hampered by high transaction costs. In particular, the valuation of technology licenses is very difficult due to the high level of technical and commercial uncertainty in which they are used.

Firms need to change their metrics for managing innovation, and use more dynamic valuation frameworks like real options. The real options approach, which is derived from financial options theory, is particularly adapted to uncertain contexts, and has been used by firms like Merck to negotiate technology licensing contracts.

Our research investigates in which cases technology licensing decisions made by firms can be analyzed as real options, and to what extent this framework may produce a more appropriate valuation of a licensing contract compared to traditional DCF (Discounted Cash-Flows) approaches.

 

Venture capital

Under construction.