Intangible Asset Valuation
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Transcript of Intangible Asset Valuation
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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