Introduction

It is necessary to carry out a calculation of the value of technology as part of the transfer process in order to have an idea of how much it is worth. This is useful information to be able to offer it in appropriate terms to potential buyers or licensees. This value depends on the nature of the technology, its degree of development, the strength of its intellectual protection, its potential to generate competitive advantages, the characteristics of the market, the degree of involvement of its developers, the capacity for commercialization or entrepreneurship, among other aspects. In addition, it varies in time and according to the circumstances that arise. As ^{Boer (1999, p. 75)} points out, technology has no intrinsic value and can only be valued in the context of a specific business situation.

In the Latin American university environment this problem is present, and it is further complicated by the fact that the vast majority of universities do not have among their functions the trade of technologies and other intellectual assets and, therefore, do not have specialized personnel dedicated to it. Nevertheless, there are a good number of them in the region that have Technology Transfer Offices (TTOs) or specialists who have been concerned not only with intellectually protecting their technological developments but also with seeking a way out to the market, so that they are used or exploited commercially. These offices and specialists use technology valuation tools, with greater or lesser success, but little has been published on how they do it and what difficulties they face in carrying out their work (^{Solleiro and Ritter, 2014}; ^{Chais et al., 2017}). Knowledge of this problem can then be useful to these technology managers and provide them with examples or empirical references to optimize their valuation practices. With that in mind, this article seeks to answer the question: what difficulties do technology managers face in their valuation of technology processes or practices? For this purpose, the available information has been used in the archives of eight cases of technologies valued in a Mexican public university, which were studied with the purpose of identifying this problem, proposing some alternative solutions, as well as presenting proposals for further research (^{Yin, 1994}; ^{Hernández et al., 2006}).

The valuation of the technology can be carried out using different methods. What is sought with them is to have an idea of the value of the technology and from this to define a potential price of the same, often in the form of royalties to be charged. In other words, “technology valuation provides a set of techniques and tools that assist technology sellers and buyers in preparing a business case for a particular technology and to agree on a future value and hence a potential price” (^{Probert et al., 2011}).

Different methods are used to value technology based on different approaches, each of them with strengths and weaknesses but which offer the opportunity to compare results from different perspectives, providing more coherence that gives certitude to the exercise (^{Razgaitis, 2002, p. 48)}. Thus, ^{Sullivan (2001, pp. 264-265)} states that the value of intellectual assets is quantified in monetary terms through the use of three classical methods: The market method, which uses the market price agreed between buyer and seller as the best monetary measure of their utility; The income method, used when a market price is not available, and that is based on calculating the cost of future benefit flows by subtracting them from the present value¹; and The cost method, which calculates the costs necessary to duplicate or reproduce an intangible good.

Based on these three classical methods or approaches, also called accepted (^{Smith and Parr, 2005, p. 148)}, traditional (^{Yan et al., 2010, p. 1932)}, or basic methods (^{Murphy et al., 2012, pp.)}, others have been proposed for specific purposes that are variants or derivations of these three. ^{Sullivan (2001, pp. 266-267)} describes, for example, in addition to the three already mentioned, the following: Technological factor, prepared by Dow Chemical for internal valuation; Expected value adjusted for probability, which allows risk elements to be quantified; Risk/obstacles index, which quantifies risk mathematically; Profit from sale, which calculates royalties based on net sales; Sullivan method, based on the knowledge of the company; Make an offer, when no market information is available; and The 25% rule, which provides an admitted value, even if it is not precise.

^{Razgaitis (2002, p. 38)} reports four methods for the valuation of technology, in addition to those of cost, of market (that are denominated Industrial Standards, where the key is finding a benchmark), and of income (Discounted cash flow): 1) Rating/Ranking, 2) Rule of thumb (25% rule and other variants), 3) Advanced methods, such as the de Monte Carlo simulation and Real Options, and 4) Auctions.

Other methods have been reported in the literature, such as those that ^{Wang and Edmondson (2014, p. 1141)} present groups under the three basic technology valuation approaches: Under the cost approach: Reproduction Cost Method and Replacement Cost Method; under the market approach: Direct Market Value Method and Analogy Method; under the income approach: Direct Cash-Flow Method, Relief from Royalty Method, Multi-Period Excess Earnings Method and Incremental Cash-Flow Method.

An alternative factorial method has been used in the Mexican university environment for some years, although in a restricted way (^{Roa et al., 1989}). The following six adjustment factors are used to calculate a royalty rate to be charged for a developing technology: technological intensity, international competitiveness, degree of development, associated commercial advantages, degree of exclusivity, and degree of integration of the technological package. These factors adjust a royalty rate obtained from market information (average royalty rate of similar transactions), which is averaged with the estimated profitability of the project (IRR) adjusted, in turn, by the real interest of the market.

It must be noted that, according to some authors, the maturity of the technology and the business determines the valuation of technology method to be used. Thus, ^{Khoury et al. (2001, pp. 79-80)} suggest that the less mature both of them are (technology and business) it is best to use a cost method; if a vision and a business plan are available, then it is best to use the income method; and if the business and the technology are mature, then the market methods seem to be the most indicated.

Problematic of technology valuation

Three basic variables participate in the valuation of technology, according to what was indicated by ^{Murphy et al. (2012, p. 8)}: 1) Information inputs (measurement of complex and confusing reality), 2) Valuation methodology that translates those inputs into a value outcome, and 3) Interpretation of the resulting value outcome. However, it is very common that not all the information required (particularly market and financial information) is available or that it is not of high quality, that is, that it is not complete and accurate (^{Murphy, 2012, p. 68}), that the methods cannot be applied due to lack of information or scarce practice in the use of valuation tools, or that the interpretation of the data obtained leads to a good result in negotiations with possible licensees since the essence of this latter is uncertainty. In addition, it has been identified that the literature on the subject focuses predominantly on the explanation of the methods, merits, and implications of specific tools, with little available research that considers a contextual and process perspective (^{Dissel et al., 2008, p. 2074}).

This is part of the problem that a Technology Transfer Office (TTO)-or more specifically, a technology manager-faces in a valuation of technology process. Other contextual factors such as maturity level of the technology, the degree of uncertainty that surrounds the particular valuation question, or the identity of individuals wishing to establish this value also play a role (^{Dissel et al., 2008, p. 2073}). Another aspect to consider that complicates the technology valuation process is the fact that it “belongs to an integrated valuation domain in which various sciences such as economics, business/administration, and engineering are required in addition to market information based on understanding of the technology. Therefore, it is difficult to conduct a systematic and completely objective evaluation” (^{Hong, 2010, p. 121}). Therefore, “the TTO personnel need to have the knowledge of technology valuation method, understand the valuated technologies, and master the industrial developments and market trends” (^{Wang, 2016, p. 1324}).

The valuation of technology is further complicated if there are no specialized personnel to carry out technological and competitive surveillance that facilitates the obtaining of technical, market, economic, and regulatory information, as well as the identification of possible licensees for the technology. The lack of all the necessary information makes it difficult to make a comprehensive evaluation of the technology (^{Lynn, 1989})² and its respective valuation, particularly if it is sought to use quantitative methods that require information on income, production and distribution costs, business profitability rates, royalty rates in the market, among other issues specific to revenue-based methods. As ^{Wang (2016, p. 1321)} points out: “The mathematical operation using an equation to calculate value is not difficult; the most complicated point is the information of profit amount, income form, and risk factor for the income approach.”

The nature and maturity of the technology are also determinant in the use of some specific method of valuation of technologies that arise from the academic field. ^{Wang (2016, p. 1323)} found that it is still difficult to implement the income approach, because the technologies developed by universities - Taiwanese in this case-, are mostly embryonic technologies, and their future development is considerably uncertain. He also identified that it is difficult to find transaction prices that serve as a reference for valuing this type of technologies, so it is not easy to use a market approach (^{Wang, 2016, p. 1324}). This difficulty was also reported by ^{Vega-González et al. (2010, p. 538)}. Another factor identified by ^{Wang (2016, p. 1326)} that affects universities in the implementation of their valuation methods are government regulations, as some of them may limit the use of some method and the price of the technology in question. Some of these difficulties have also been pointed out by the Russell Group, which brings together several British universities, when it reports that: “The valuation of intellectual property assets can be extremely challenging due to market uncertainty related to early-stage university technologies, including timescales to market, investment needs, and avenues to achieving commercially viable outcomes (^{House of Commons, 2017, p. 25}).

However, despite the abundance of literature on valuation methods, our study indicates that there is little empirical evidence on the difficulties faced by managers in the valuation of technologies from the university environment³, which hinders their learning and prevents them from having references to similar problems that could be used for their benefit or to develop best practices⁴. Hence the importance of their study. Thus, the objective of this work is to identify the main factors that hinder the valuation of technologies developed in universities, in order to better understand their problems and to offer proposals for improving the process itself.

Our research identified nine difficulties that technology managers encounter when valuing university-sourced technologies (also called technological developments). These can be grouped into four factors: a) Lack of quality information-that is complete, accurate, and timely-on commercial aspects, production and marketing costs, royalties charged on similar technologies, as well as on the direction of the project; b) Lack of valuation skills by the managers in charge; c) Maturity of the technology, since the lower the degree of development, the less information and the greater the uncertainty there is (which determines the method to be used); and d) Form of business operation, since companies in certain sectors do not like to invest in R&D or comply with environmental regulations or, which was common to find in the cases studied, are not interested in the technologies developed because they are outside their areas of interest for partnering.

In addition to this chapter, the article includes a description of the methodology used, which incorporates a description of the cases studied and the reasons why they were selected; it continues with a section on analysis and discussion of the results and at the end presents conclusions and suggestions for future work.

Methodology

Brief description of the technologies valued

Selection of the valued technologies

In order to define the technologies to be studied, the following elements were taken into consideration: a) All the cases have been analyzed using known valuation methods: five of them were valued using three methods, one used two and in two other cases only the market method was used (Table 1); b) Given that the intention was to analyze the problems of valuation of technology, cases of different technologies were chosen according to their nature and application in various sectors, in order to have a broad spectrum (Table 1); c) It was considered important to have first-hand information on the cases to be valued, so the continuous interaction with researchers and the existence of historical archives was decisive for their choice; d) All the projects selected have been carried out in different academic departments of the same University; e) One more reason that determined the selection of the eight cases was that the results of the valuation studies, carried out between 2011 and 2016, were available, the objective of which was to determine the most adequate royalty rates to be charged in the event of their transfer.

Analysis and discussion of the results

Conclusions

Derived from our empirical data, this article contributes to the literature a series of elements that allow better understanding the valuation process of technologies generated from R&D projects, in early stages, in public universities, identifying a set of difficulties that arise in this activity. We argue that these difficulties form a specific problem that can be solved by the actors participating in the process if they are better trained in the use of the different valuation methods (^{Koury, 2001}; ^{Razgaitis, 2002}; ^{Dissel et al., 2008}; ^{Probert et al., 2011}), obtain the necessary information to evaluate technologies in their prototype stage, and deepen the analysis of the business dynamics and sectors of application of such technologies in such a way that they can define more successful negotiation and transfer strategies (^{Wang and Edmonson, 2014}; ^{Van Norman and Eisenkot, 2017}). It is also recommended that technology managers know and adopt good marketing practices in public universities, nationally and internationally, as to increase the efficiency of technology transfer in them (^{DeVol et al., p. 33}).

This work contributes to the theory of valuation of technology in an academic setting. In particular, it is shown that the evaluated cases support the findings partially reported in the scarce literature found on the subject and contribute by providing more precise information on the difficulties that, in practice, are presented in the valuation of this type of technologies in whose development companies have not participated (^{Vega-González et al., 2010}; ^{Wang, 2016}; ^{Chais et al., 2017}). The cases were used to identify, above all, the difficulties experienced by technology managers who valued technological developments, which does not mean that there have not been adequately resolved situations, or that good technological management practices have not been used during the execution of the projects. However, we believe that practitioners-technology managers, entrepreneurs, consultants-will find in this work a set of factors to be addressed to improve their valuation practices in similar contexts.

Thanks to the case studies, it was possible to identify nine difficulties that hinder the valuation of technologies of university origin that must be overcome if we want to achieve better results in technology transfer, namely: lack of accurate market information, lack of knowledge of production and marketing costs, lack of reference information on royalties in the sector, lack of information on the direction of the project, lack of knowledge to valuate technologies, low level of technology development, low degree of integration of the technology package, risk aversion by companies, and technologies outside the business radar of the companies. These difficulties can be grouped, for analytical purposes, in four factors: i) Lack of information, ii) Lack of valuation skills, iii) Maturity of the technology, and iv) Form of operation of the companies.

For the rest, it is evident that, in order to deepen the understanding of these factors and their importance, more empirical work is required to be carried out in other universities to test and validate the results obtained. It may also be of interest to carry out future research on the use of other valuation methods and the difficulties faced by other types of organizations.