Identification and Research of Key Information Requirements

This is carried out to reduce the subjectivity of the valuation process. If sufficient relevant, reliable and objective information in the valuation process is not available, any opinion on value must be qualified.

The valuer needs comprehensive knowledge and understanding of the asset to be valued, the company and the market, and its results, both historical and prospective. The valuer must also consider as many financial, legal, market and industry factors as possible.

Important internal information includes:

• audited financial statements
• management accounts
• budgets and forecasts
• strategic, business and marketing plans
• capital and marketing expenditure plans
• internal market/industry research and analysis
• schedules for intellectual property rights

External information required depends on the valuation methodologies employed.

Market based methodologies require information on sale transactions involving both intangible assets and companies owning significant intangible assets to provide indications of market value. Adjustments then need to be made for differences in sizes of assets or companies, and other economic indicators.

Income-based methodologies require comparative information on capitalisation of net cash flows/earnings, brand contribution, royalties, discount rates, etc.

Cost-based methodologies requires an understanding of cost structures, the temporal nature of the asset and market perceptions of the need for the asset.