This document discusses how intangible assets affect business valuation. It examines four common intangible assets - customer relationships, trademarks, non-compete agreements, and proprietary technology. While intangible assets can substantially impact business value, their value varies significantly between companies and depends on factors like customer dependence, brand reputation, and how technology is organized and applied. The presentation emphasizes that properly valuing intangible assets through an experienced appraiser can make an important difference when selling a business.

1. Business Valuation:
Intangible Assets
Presentation by
Schwartz Heslin Group, Inc. (SHG)

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. This presentation examines
General Guidelines
for how intangible assets affect the
valuation of a
business

4. Four Common Intangibles
We’ll cover four the most intangible assets involved in
business valuation:
• Customer Relationships
• Trademarks
• Non Compete Agreements
• Intangible Technology

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. 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. So…
Rely on a diverse group of individuals to draw in
business to bolster enterprise value
OR
Better yet, rely on a Brand Image
 this insulates a company from management
changes and dependence on individuals
 bolstering company
value

8. Trademarks
Trademarks can valuable branding tools
Can impact customer decision making
Can identify a brand with quality
But…
• An unknown trademark is fairly worthless
• Poorly repute branding materials can have a
negative impact on business value

9. Non Compete Agreements
Non competes can insulate a business from potential
competitors by barring key individuals from creating a
rival enterprise
• Ensuring
a less competitive space adds
value
to a business

10. But…
Failure to get a non compete agreement from key
managers opens a business to competition
 Has a
negative impact
on the value of a business

11. Proprietary Techonology
Acquiring and maintaining technological expertise has
a 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. But…
The value of technological expertise will vary with
• How expertise is maintained and organized
• How such assets are applied to production
processes
• Business model
In general, technological expertise will have a positive
impact on enterprise value

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. 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. Presented by:
Schwartz Heslin Group
Address: Or visit us on:
8 Airport Park Bvld.
Latham, NY 12110
Phone:
518-586-7733
Web:
www.shggroup.com