The valuation of technology in buy‐cooperate‐sell decisions

This paper is aimed at studying the technology in buy‐cooperate‐sell decisions process in order to identify and analyse the logical steps that should characterise a complete and reliable appraisal process.

The paper develops a framework to support the whole process, based on literature analysis and an empirical study. A case study is presented in order to discuss some of the theoretical and practical problems affecting the appraiser during a technology valuation.

It is found that the use of the proposed framework: forces the appraiser to perform a systematic and rational analysis, coherent with the internal and external context of the valuation; points out the most critical elements that could lead to a misleading and/or unusable and/or biased valuation; forces the appraiser to solve some critical trade‐offs and to deal with contrasting elements; imposes coherence throughout the process and consistency among the various hypotheses and assumptions needed to finally identify a (range of) final value(s); gives the appraiser a communication tool, as different people are involved during the process; allows people (even if not directly involved in the process) to understand how the value of the asset has been determined and the validity, reliability and precision of the results obtained; and increases the bargaining power of the appraiser during the negotiation with a potential counterpart, allowing a clear and complete understanding of the value of the asset.

This paper analyses the entire process and gives emphasis to the critical aspects of each phase, suggesting some solutions.