A study to develop a model for financial feasibility and valuation of a firm and its intellectual property: a case of innovation-driven enterprise (ide) of agricultural industry in thailand.

Abstract

This study develops a valuation model for Intellectual Property (IP) and business valuation tailored to Innovation-Driven Enterprises (IDE) within Thailand’s agricultural sector. Utilizing action research through a single-case study, the research aligns with Susman and Evered’s five-step methodology (1978) and valuation criteria from Lagrost et al. (2010), adapted specifically to Thai agribusiness. Participants comprised executives, finance and accounting specialists, and investors from Thai agricultural biotechnology IDEs. Four valuation approaches were assessed: Cost, Market, Income, and Option Pricing. The Cost Approach yielded the lowest IP values but provided valuable non-financial insights. The Market Approach was effective for early-stage ventures, while the Income Approach, contingent on detailed validation of variables, suited mature enterprises. The Option Pricing Approach offered the highest valuations but faced challenges in risk assessment, restricting its suitability to niche industries such as pharmaceuticals. For business valuation, the study recommended the Market Approach initially, shifting to the Income Approach upon reaching stable growth. The resulting model strengthens IDEs' negotiations with venture capital investors, enhancing their potential for successful expansion.