Patent Valuation Mandate for Urban Turbine Technology Financing

Mandate Description

The objective of the mandate was to determine the fair value of a patent relating to a high-efficiency compact urban turbine technology intended for residential and industrial applications.

The valuation was carried out in the context of a financing transaction involving a contribution in kind and included a technical, legal and financial analysis of the intellectual property protection and the level of technological maturity.

Unlike other assignments, the client company maintained rigorous and fully reliable accounting records, allowing direct access to detailed research, development and prototyping expenditure data.

Thanks to the quality of this accounting information, no additional historical cost due diligence was required to reconstruct the costs associated with patent development, enabling a rapid and highly verifiable cost analysis.

Key Issues

The main challenges of the mandate were to estimate the economic value of a patent in the pre-industrialisation phase.

A key objective was to assess the commercial potential and expected profitability in a market highly sensitive to energy policies and regulatory frameworks.

The valuation also needed to secure the in-kind contribution from a financial perspective vis-à-vis auditors and investors.

Finally, the assignment aimed to provide a transparent and robust valuation framework to serve as a basis for financial and contractual negotiations.

Approach and Results

The valuation relied on several complementary approaches adapted to the context of an emerging technology.

• A royalty-based approach was applied, involving the calculation of future royalty flows associated with the exploitation of the patent, with royalty rates derived from a panel of sector benchmarks including licensing agreements and transactions observed for comparable technologies.
• An income-based approach using discounted cash flow modelling was implemented to project the economic cash flows generated by commercialisation and industrial deployment.
• A cost-based approach was applied through the reconstruction of research, development and prototyping expenses directly from the accounting records provided by the client, without the need for additional historical cost due diligence.

In addition, a market approach was used, based on comparisons with transactions and valuations observed in the micro-turbine and decentralised energy sectors.

The cross-analysis of these approaches resulted in a robust and well-reasoned valuation range, balancing prudence with expected profitability potential.

The report served as a reference document for the validation of the in-kind contribution by auditors and for securing discussions with institutional investors