Intangible asset valuation Intangible assets are a key value component to most companies nowadays. Despite that, intangible assets are normally not shown in a company’s balance sheet. This is because intangible assets are often internally created or developed. For many companies, intangible assets often determine the strength and endurance of their competitive advantages and growth capacity. Without a proper understanding of what a company’s intangible assets are may lead to at least two value destruction consequences:
Shareholders or investors may not be able to accurately assess the true value of their investment and the associated risks leading to sub-optimal investment decisions; and Management may miss the opportunity to grow the company at a higher rate (and more effectively) by leveraging a company’s intangible assets in its expansion/growth strategy. Moreover, intangible assets can be used as a defensive tool against competition
Valuation of intangible assets is generally less understood among the advisory community. When performing an intangible assets valuation, many simply apply the methodologies used for business and share valuation without taking into consideration the unique nature of intangible assets: 1) they do not exist in a vacuum. Their worth relies on the contribution made by tangible assets (such as land and equipment) and; 2) they are riskier than the overall business. Perform an intangible asset valuation in a proper manner is complex and technically demanding. We have extensive experience and capability in valuing intangible assets including:
n Brand
n Trademark and trade name
n Patent and technology
n Customer relationships
n Distribution rights
n Research and development
n Copy right
n Mining rights
n Software
Please refer to ‘Publications’ section for explanatory notes of intangible asset valuation in compliance with the relevant accounting standards. |