Determining the value of an innovative technology requires special expertise. That's why The Technology Resource of the Southeast uses a Triangulation process. This process calls on three distinct approaches to generate early stage and emerging technology valuations that can be used with confidence.
1. Net Current Value
First, Technology Resource approaches the new technology as a potential investor would. It computes the net current value, or the anticipated profit or loss of a long-term investment calculated in a way that takes the cost of money into account. In many cases, Technology Resource employs the Black-Scholes formula, a method for determining pricing in risky or uncertain situations so reliable it earned its creators the 1997 Nobel Prize in economics. What results is the technology value, or the total purchase price expressed in today's dollars a licensee will pay over the technology's useful life.
2. Translating Royalties into Sales Projections
Next, Technology Resource looks at the technology from a potential licensee's perspective. After determining a reasonable royalty rate, Technology Resource estimates the gross sales that licensees need to realize over the technology's expected lifespan (traditionally 20 years) to make their purchase cost-effective.
3. Market analyses and forecast projections
Finally, Technology Resource uses an analysis of the potential market for the new technology based on markets for comparable technologies to estimate gross sales revenues over the technology's lifespan.
If the gross sales estimate resulting from the market analysis make it reasonable to assume that licensees will in fact be able to realize the sales they need to justify their purchase of the technology, then the technology value is an accurate, workable figure.
Economic Time Series
In 2004 we studied and evaluated the "Economic Time Series" (Nobel Prize, 2003) models and variations and found it provides valuable new tools for measuring volatility and other variables of valuations. Financial Analysts accept the work by Professors Granger & Engle as indispensable tools in asset pricing and risk analysis. We are pleased to announce that we have integrated this new tool to our valuation analysis models which also includes the Black-Scholes methodology (Nobel Prize, 1997.)
Technology Life Cycles
Our technology life cycle chart has been developed to aid in understanding the continuing evolution of the technology development and re-invention cycles that keep businesses alive and competitive.
Feel free to download a copy, with our compliments. (PDF 1MB)
The Technology Resource of the Southeast, Inc.
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Johnson City, TN 37604
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