A preliminary analysis of the use of valuation methods by technology transfer offices

Abstract

Valuing invention disclosures in universities involves an assessment of research outcomes that go well beyond the opportunity to make financial profits. Valuation is also about determining what technical solutions are worth, either in terms of technical and scientific achievements but overall, what benefits does it bring to industry and the larger society. The good use of valuation methods to estimate and predict the outcomes of continuing to invest in the technical solution, is a major issue addressed by universities' Technology transfer Offices (TTOs), which have to decide whether to file or not a patent to enforce industrial property rights and to gain the exclusivity to use and grant exploration rights over the new technical solution. University Technology Transfer Offices, in close connection with the research teams, must also make decisions regarding the technology roadmap and what avenues of investment will be used, and what valorisation routes will bring greater benefits to move the technology to industry where the results are developed into new products, compounds or systems or even services that benefit multiple stakeholders. This paper provides evidence on what are the main technology valuation methods in use by technology transfer offices. Qualitative and quantitative data has been collected by surveying eight Portuguese University TTOs. The statistical data has been treated using the one-sample T-test to identify the most common technology valuation methods. From the data it was possible to conclude that rating/ranking methods and models are the most frequently used valuation methods, followed by market valuation approaches. Previous agreements and discounted cash-flow projections are mainly used when a spin-off firm is under consideration or when there is a manifestation of interest from a potential investor. Royalty standards are used to prepare licensing negotiations, and Real Options, Monte Carlo simulation and Auctions are hardly ever used.