A great info-graphic from Raconteur that highlights the growth of intangible asset valuations and how senior decision-makers view intangibles when making investment decisions.
Today, intangible assets (items such as data, content, software code, company, and product brands, confidential information, inventions, patents, industrial know-how, and design rights today account for more than 87% of all company value. They are now the primary driver of company profitability and growth.
Unfortunately, intangible assets are essentially ignored by modern accounting standards. They either never make the balance sheet, are lost under the amorphous term “goodwill,” or are listed at cost (and there is essentially no correlation between cost and value with intangible assets).
When it comes to valuing intangible assets, conventional valuation methods tend to significantly under-value intangible assets and intangible asset-rich companies. With more than 87% of company value now being driven by intangible assets, this is a significant issue.
While more complex than a conventional valuation, our valuations work on the principle that a strong intangible asset position delivers enhanced competitive advantage which translates into superior market share or margins and ultimately significantly increases the value of the business.
We use a proprietary three-factor model that utilizes traditional quantitative methods but importantly also analyzes the Contextual and Qualitative factors. This is critical as these factors are primary drivers of intangible asset value.
EverEdge’s BenchMark™ Intangible Asset Valuations have helped generate the following outcomes for our clients:
- Provided the valuation that supported the largest capital raise ever in Asia for a pre-revenue company: $400M raised at a $200M pre-money valuation [Singapore]
- Oversaw the sale of a SAAS company at a 67X multiple [Australia]
- Oversaw the sale of a financial services company at a 32X multiple [United Kingdom]
- Sold the intangible assets of a failed company on behalf of its investors, generating a 45X return [United States]
- Valued the intangible assets of a publicly-traded company entering a JV saving them US$22M in cash [New Zealand]
These results mean our Return on Fees tend to be very strong – typically more than 10X – as even a small upward movement in pre-money valuation vastly offsets our fees.
You’ll find more on our valuation services here.