Wednesday, April 16, 2008

Valuing Intellectual Property

The Indianapolis Business Journal's Valuing Vonnegut gives us an Indiana resource for valuing intellectual property.

"Stating such influence in monetary terms might seem like a monumental task, but there are surely many accounting firms larger than Pelligrino’s that would have loved the job. Vonnegut’s longtime attorney called Pellegrino out of the blue in November. Donald Farber, counsel with New York-based Jacob Medinger & Finnegan LLP who represents the Vonnegut estate, declined to comment for this story."


Pellegrino said Farber was aware of his work. The 33-year-old local entrepreneur has been building a reputation in the intellectual property valuation niche since he founded his firm in 2003. Once the CFO of Fort Wayne-based softwaremaker Logikos Inc., he struck out on his own when he saw a demand for appraisals of early-stage, high-tech firms.

His fees start at $4,000, but—depending on the complexity of a valuation job—can rise to as high as $100,000. He wouldn’t say what he’s being paid to value Vonnegut’s work.

Not all his jobs are so high-profile. Entrepreneurs use Pellegrino’s evaluations as the basis of negotiations with investors. Others find them useful for tax purposes, or in litigation. His clients have included Uni-Systems LLC, the Minneapolis-based company whose patented technology will allow the roof on the new Lucas Oil Stadium to safely retract. Two years ago, Pellegrino helped information technology trade group TechPoint successfully lobby the Indiana General Assembly for a change in tax law that allows firms to more accurately write off their investments in software.

Valuation doesn’t always establish a high price. Pellegrino said many business owners are disappointed to find their intellectual property isn’t as unique or precious as they expected. There have even been times, he said, that his appraisal established a negative value for an asset. That means it would cost money just to unload it.