A Royalty Agreement refers to an agreement under which an entity with the intellectual property over a product or service grants permission of usage to a third party. The grantor of the intellectual property, such as copyright or patent, receives agreed royalties from the grantee for the use of the intellectual property. When undertaking a business valuation for a manufacturing firm, distributor or major retailer, a royalty agreement is one of the intangible assets which is considered because it can be recognised and the associated economic benefits reliably measured. Intangible assets are a class of assets without physical form but can provide economic benefits and significant value to the owners. To estimate the fair market value of an intangible asset such as a royalty agreement, business valuation analysts apply techniques under the income, market and asset methods.