A numeric technology valuation model in conjunction with chemical reaction kinetics

Abstract

For the effective management of the technological asset, like patent, the value of the technology is required to be known to the parties who are involved in the value creation with the technology. Accordingly, technology valuation is not only important but also indispensable for technological asset management. Owing to the recognition of the technology as an asset, technology valuation attempts to estimate the fair market value and some approaches for technology valuation have been introduced. The well known approaches are cost approach, market approach and income approach. Among those approaches, income approach is most widely refers to executive working-level valuation because it reflects the potential value from the prospective profit by the application of the technology. In the income approach, the value of technology is expressed in the form of monetary unit by applying technology-contribution portion to the net present value from business profit gained by the technology commercialization. However, it is not easy to decide the contribution portion of the technology without appraiser's subjective judgment due to being nonexistent of definitive model to compute it. Here, we propose numeric technology valuation model applying Arrhenius's theory in chemical reaction kinetics to burst the appraiser's subject judgment. From the test results, we can see that there is correlation between the value by the proposed model and the value by appraisers. It means that the proposed model can perform objective valuation for working-level activities.