TRL/MRL

Introduction

It is often said that “Technology is only valuable when it meets the market”.
This meeting, however, is not immediate. Between the idea and the product, between research and marketing, there are several years of uncertainty, prototypes, technical validations and industrial tests.

This is where the notions of TRL (Technology Readiness Level) and MRL (Manufacturing Readiness Level), indicators of the degree of technological and industrial maturity of an asset.
But the question remains: When determining the discount rate for an intangible asset, should a specific adjustment related to these maturity levels be included?

TRL, MRL and Risk: A Necessary Weighting Approach

Yes, because the TRL and the MRL translate a measurable reality of risk.
An asset at the preliminary research stage does not have the same profile as a technology that is already industrialized.
Integrating these indicators into the discount rate therefore makes it possible to: Weighting value by maturity, reflecting the distance between the concept and the market.

In practice, a technology with a low TRL (for example 3 or 4) has a high risk of failure, justifying an additional premium in the cost of capital.
Conversely, an asset with a TRL or MRL close to 9 is often ready to be exploited, and can benefit from a more moderate rate.
This approach makes valuation more consistent with the real stage of development of the asset.

When TRL/MRL Complicates Valuation More Than It Clarifies It

However, always including a TRL/MRL adjustment in the discount rate can be a problem.
First, because these indicators, while useful, remain partly qualitative and dependent on the judgment of the evaluator.
They vary according to the interpretations, sectors and standards used.

Then their impact can be redundant with other components of the cost of capital: technological risk, market risk, or even the specific premium applied to non-mature intangible assets.
In other words, introducing a TRL/MRL correction sometimes amounts to add uncertainty over uncertainty.

Finally, some technologies may have a low TRL while benefiting from disruptive potential or strong institutional support (strategic patents, public programs, industrial consortia), which relativizes the need for an excessive premium.

Words from the manager

Valuing an intangible asset can never be reduced to a formula.
It is based on a fragile balance between the rigor of the figures and the intuition of the real maturity of the project.
The TRL and the MRL do not say everything, but they direct our attention to the essential question: How ready is this technology to live by itself?

Summary

The TRL and MRL levels offer a valuable reading of the maturity of an asset.
Yes, their inclusion in the discount rate reinforces the accuracy of economic reasoning by adapting the risk to the stage of development.
But no, they should not become an automation or a mechanical adjustment factor.

The fairest approach is to translating technological maturity not by a single bonus, but by a integrated vision :

• The TRL/MRL sheds light on the risk profile,
• The discount rate expresses it in financial language,
• And the assessment narration connects the two, contextualizing each parameter.

In the end, Maturity is not a given, it is a reading.
The role of the evaluator is not to punish a technology for its youth, but to understand how much its potential is still under construction — and to make it an honest reflection in the rate he retains.

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