Why Value Intangible Assets?
There are a number of situations in which intangible assets and intellectual property may need to be quantified economically. These include:
Acquisitions
particularly where a significant portion of the value of the acquisition is not in tangible assets. There is often a requirement that financial statements properly reflect assets acquired.
Bankruptcy
where claims may be made as to the significant value of intangibles
Tax Assessments
covering a range of taxation considerations including capital gains tax, stamp duty etc. and dependent on tax law definitions of intellectual property
Financing
where intellectual property can be used as loan collateral or as the basis for a financing structure
Income Taxes
where foreign subsidiaries of parent companies gain income using intellectual property of the parent
Infringement Lawsuits
where value must be attributed as a result of infringement of intellectual property
Joint Ventures
where contributions to the venture may be a mix of tangible and intangible assets
Licensing Arrangements
where the relationship between existing intangibles and future income is determined
Marital Dissolutions
where businesses that are part of marital property often possess proprietary intangible assets
Property Taxes
where there can be confusion between the relative contributions of real property value and intangible asset value
Management Support and Presentation
enabling an assessment of a company's return on assets and the performance of management, strengthening balance sheet presentations and advising shareholders of the financial position of the company including "hidden" assets.
In some situations, the valuation is publicly disclosed and the assets may be recorded as part of an acquisition, in company balance sheets or financing arrangements. In other situations, for example in management support or in submissions to lenders to support funding proposals, the valuation remains undisclosed and confidential to the company.