Presentation by Schwartz Heslin Group, Inc. (SHG)

Business Valuation: Intangible Assets

Intangible Asset Valuation…

• Is both art and science• Varies extensively by company and

methodology• Is essential to accurately assessing

the value of a business

This presentation examines

General Guidelines

for how intangible assets affect the

valuation of a

business

Four Common Intangibles

We’ll cover four the most intangible assets involved in business valuation:

• Customer Relationships• Trademarks• Non Compete Agreements• Intangible Technology

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

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

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

Trademarks

Trademarks can valuable branding tools

Can impact customer decision makingCan identify a brand with quality

But…• An unknown trademark is fairly worthless• Poorly repute branding materials can have a

negative impact on business value

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

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

Proprietary Techonology

Acquiring and maintaining technological expertise has a positive impact on the value of a business

• This includes:o Engineering drawingso Procedureso Systems o Technical documentso Other technological know-how

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

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

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

Presented by:

Schwartz Heslin Group

Web: www.shggroup.com

Phone: 518-586-7733

Address: 8 Airport Park

Bvld.Latham, NY 12110

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