CLP Licensing Valuation & Financial Analysis Flashcards
6 cards from real CLP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CLP Licensing Valuation & Financial Analysis flashcards as text
Which valuation method estimates the value of a license by comparing it to similar transactions in the marketplace?
Answer: Market comparable approach
The market comparable approach values a license by referencing similar arm's-length transactions in the market.
The '25% rule of thumb' in licensing suggests the licensee should pay the licensor approximately what share of gross profits as a royalty?
Answer: 25%
The 25% rule of thumb holds that a licensee should pay roughly 25% of expected gross profits to the licensor as a royalty.
What does NPV stand for in the context of licensing deal financial analysis?
Answer: Net Present Value
NPV (Net Present Value) discounts future cash flows to their present-day worth to evaluate a deal's financial merit.
A running royalty in a license agreement is best described as:
Answer: A percentage of sales paid periodically over the license term
A running royalty is a per-unit or percentage-of-revenue payment made to the licensor over time as the licensee sells products.
Which financial metric measures the minimum sales volume a licensee must achieve before royalty payments cover a fixed upfront license fee?
Answer: Break-even point
The break-even point is the sales volume at which cumulative royalties equal the upfront fee investment.
In the income approach to IP valuation, what primary element is discounted to determine value?
Answer: Future incremental cash flows attributable to the IP
The income approach discounts projected future cash flows that are specifically attributable to the intellectual property being valued.