Intangible Asset Valuation

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A few guidelines for maximizing the value of a business' intangible assets.

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Intangible Asset Valuation

  1. 1. Business Valuation:Intangible Assets Presentation by Schwartz Heslin Group, Inc. (SHG)
  2. 2. Intangible Asset Valuation…• Is both art and science• Varies extensively by company and methodology• Is essential to accurately assessing the value of a business
  3. 3. This presentation examines General Guidelinesfor how intangible assets affect the valuation of a business
  4. 4. Four Common IntangiblesWe’ll cover four the most intangible assets involved inbusiness valuation:• Customer Relationships• Trademarks• Non Compete Agreements• Intangible Technology
  5. 5. Customer Relationships • Maintaining healthy customer relationships can be the backbone of sustaining consistent and reliable revenue streams • Satisfied customers return for repeat business and can be referral sources
  6. 6. But…• Too few customer relationships and little reliable repeat business can negatively impact the value of an enterprise• Positive effects of good customer relationships will vary with business model• If a business is dependent on a single individual to bring in an outsize proportion of revenue, it may be too dependent on that individual
  7. 7. So…Rely on a diverse group of individuals to draw inbusiness to bolster enterprise value ORBetter yet, rely on a Brand Image  this insulates a company from management changes and dependence on individuals  bolstering companyvalue
  8. 8. TrademarksTrademarks can valuable branding tools Can impact customer decision making Can identify a brand with qualityBut… • An unknown trademark is fairly worthless • Poorly repute branding materials can have a negative impact on business value
  9. 9. Non Compete AgreementsNon competes can insulate a business from potentialcompetitors by barring key individuals from creating arival enterprise • Ensuring a less competitive space adds value to a business
  10. 10. But…Failure to get a non compete agreement from keymanagers opens a business to competition  Has a negative impact on the value of a business
  11. 11. Proprietary TechonologyAcquiring and maintaining technological expertise hasa positive impact on the value of a business• This includes: o Engineering drawings o Procedures o Systems o Technical documents o Other technological know-how
  12. 12. But…The value of technological expertise will vary with • How expertise is maintained and organized • How such assets are applied to production processes • Business modelIn general, technological expertise will have a positiveimpact on enterprise value
  13. 13. Intangibles and Business Value• Intangible assets can have a substantial impact on the value of a business• There are many types of intangible assets• Different types and applications of intangibles cause variance in their values across companies
  14. 14. For Business Owners• Proper intangible asset valuation can make a substantial difference in the sale value of a business• Have your business appraised by a professional with experience with intangible asset valuation before selling your business
  15. 15. Presented by: Schwartz Heslin GroupAddress: Or visit us on: 8 Airport Park Bvld. Latham, NY 12110Phone: 518-586-7733 Web: www.shggroup.com

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