Strategic investments are those that involve a large amount of money and that typically have high uncertainty. Examples are the investments in new technologies, in launching a new product or in R&D. Such kind of investments are often subject to changes after their start, depending on modifications that occur during the development of the project. Therefore, they must be re-evaluated. For these reasons the “classical” Net Present Value (NPV) method is not adequate for assessing them. Advanced methods like the Decision Trees or the Real Options Approach are able to better model such situations, as the option included in the project is often the real source of strategic value.
These methods can be usefully used in valuing many kinds of intellectual property (IP) rights, such as patents or licenses, as they intrinsically contain the concept of option. After a general description of methods most used in practice for evaluating intellectual property, examples are provided regarding the evaluation of IP by using the option theory, as the case of patents that can be often seen as acall option and so evaluated by using option pricing methods.
