Valuing Business’s Intangible Assets: Frustrations and Reservations

Michael D. Moberly – February 17, 2024 – Business Intangible Asset Strategist & Risk Mitigator – Founder, Business Intangible Asset Blog & kpstrat

I am a strong advocate for valuing businesses intangible assets, provided the valuation process…

  1. recognizes the various (15) types-categories of intangible assets that may be in play.
  2. differentiates intangible assets relative to contributory roles to product-service-brand-operating culture competitiveness, revenue generation capability, resilience, sustainability, and their mission essentiality.
  3. distinguishes the various forms, contexts, and/or applications of unique and often proprietarily developed-held-applied
    • intellectual capital (knowledge-know how).
    • structural capital (processes, procedures).
    • relationship capital (associations, alliances, interactions).

Unfortunately, most approaches for valuing non-physical assets, as I view them…

  • appear as convention laden snap-shots-in-time.
  • presume one-valuation-methods-fits-all.
  • deliver outcomes akin to assigning the assets to hospice, i.e., near the end of their useful contributions and life cycle.

Through my lens, (as a business intangible asset strategist and risk mitigator) conventional approaches to valuing business’s intangible assets seldom exhibit or reflect much, if any, appreciation for, nor receptivity that reflects the…

That is, today, and for the foreseeable future, 70 – 80+% of most business’s valuation, competitiveness, and revenue generation capability, etc., lie in – derive directly from intangible (non-physical) assets.

 This translates to every business and/or startup – early-stage firm I have encountered over three decades, their competitiveness, revenue generation potential, resilience, and sustainability (ala their valuation) is reliant – dependent on…

  1. developing + safeguarding-mitigating risks to the right sets of intangible assets.
  2. introducing – applying those assets at the right time, in the right way, at the right cost.
  3. embedding all in operating culture and treating those assets as mission essential.

Down-sides to using conventional valuation approaches which often include ‘presumptive cycles of accountable valuation-life cycle’ seems is akin to methods applied to valuing tangible-fixed assets with ‘baked in’ durations of contribution and/or valuation with projected obsolescence or write-off.

Readers could also compare convention-laden (intangible asset) valuation methods to trade-in valuation assessments for automobiles designated as high mileage. Dealership used car staff are obliged to emphasize appearance blemishes and marginalize whether the owner met – exceeded recommended maintenance for the vehicle. The latter is readily verifiable and is a legitimate ‘value add’ and attractive to prospective buyers for resale purposes.

  • After all, buyers want an automobile with no hidden or probable problems which translate to costs.

Similarly, businesses mission essential intangible assets frequently go unrecognized, overlooked, and seldom, if ever differentiated insofar as contributory roles – value adds to competitiveness, revenue generation, durability, sustainability, and overall valuation.

  • However, all is warranted – fiduciarily obliged today considering business things intangible play such significant-consistent roles in/to not only valuation, but competitiveness and reputation of every business’s operating culture.

Posts @ Business Intangible Asset Blog present various business economic – operational realities. Each warrants the attention of business leaders, entrepreneurs, R&D administrators, management teams, boards, and investors across sectors. Mitigating (reacting, responding to) the often ‘public – viral’ risks and challenges which produce reputational risks, are obligations with little room or time for equivocation or error.

The Business Intangible Asset Blog was created in 2006 and now includes 1200+ topic-specific posts. Each is intended to provide readers with reliable insights on current matters affecting business things intangible.

Posts at Business Intangible Asset Blog are developed – written solely by Mr. Moberly and are intended to draw attention to the development, application, management, safeguards, and risk mitigation of business’s ‘mission essential’ intangible assets.

Readers are respectfully invited to explore other posts, along with books and papers available @ ‘Home – kpstrat

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