The relief-from-royalty method values an intangible asset — brand, technology, patent, know-how — by estimating the royalties the company would have had to pay to license the asset if it did not own it. The asset value equals the net present value of the royalty savings (royalty rate × projected revenue), discounted at an appropriate after-tax risk-adjusted rate. It is the primary method for valuing brands and technologies in PPA engagements and intangible asset valuations, recommended by the IVSC and widely accepted by Big Four auditors.

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Example: a Swiss brand generates CHF 25.0 million in annual revenue. A market royalty rate of 4% is selected from comparable brand licence transactions (RoyaltyRange database). Annual royalty savings: CHF 1.0 million. After-tax present value at 10% discount rate over 15 years: CHF 7.6 million — the brand's fair value recognised as a separately identified intangible in the PPA. See our software valuation publication for technology application.

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Hectelion applies the relief-from-royalty method in brand, patent and technology valuations for PPA, intangible asset disposals and litigation support across France and Switzerland.