High Technology Royalty Survey Financial Terms: Descriptive Statistics and Analysis
Jiaqing "Jack" Lu
Applied Economics Consulting Group, Inc.
April 15, 2012
Chapter 5, 2011 High Technology Sector Deal Term & Royalty Rate Survey Report, the Licensing Executives Society (U.S.A. and Canada), March 30, 2012.
The High Technology Sector of the Licensing Executives Society (U.S.A. and Canada) conducted the first deal term and royalty survey in 2011. A total of 228 licensing transactions were reported, and 220 of them included various forms of royalty payments. This article analyzes the descriptive statistics of the lump sum payments and the flat running royalty rates expressed as percentages of sales. The average of 119 transactions with sales-based percentage rates is about 6%, and the median is 5%. Lump sum payments vary drastically across transactions, and the median is about half million. The analysis further tabulates descriptive statistics by characteristics of licensor/licensee, performance of licensed products, number and type of IP licensed, field of use, technology type and development stage, and certain licensing terms such as exclusivity, co-marketing, and auxiliary payments.
Keywords: High tech, royalty survey, average royalty rate, median royalty rate, license term, running royalty rate, lump sum payment
JEL Classification: O32, O34, C13Accepted Paper Series
Date posted: April 16, 2012
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