Purpose: To provide management with independent valuation information on intangible assets created by intellectual or inspirational processes as a basis for making transaction decisions.

Intellectual properties are a sub-classification of intangible assets. They are created by a human intellectual or inspirational activity. That activity is specific and conscious, and the creativity involved can be attributed to specific individuals. While intellectual properties have all of the value attributes of other intangible assets, they enjoy special legal recognition and protection. Among others, intellectual property includes trademarks, patents, copyrights, technical know-how and data processing/technology.

Appraisals of intellectual property are required for purchase price allocations following business combinations. Management may also use intellectual property appraisals for transaction planning (i.e., sales and acquisitions, establishing royalty rates for licensing decisions, inclusion in IPO documentation, strategic alliances, financing transactions and cost-sharing arrangements).