intangible assets and value of companies
Regardless of the method used, company valuation is essentially an evaluation of the organization’s ability to create value in the future. In today’s service-oriented economy, client fidelity, ability to attract talent, and innovation ensure the longevity of an organization. These key factors of performance make up the intangible assets of a company and contribute to its value, despite not always appearing on balance sheets. As such, evaluating intangible assets is essential for a more accurate company valuation, taking into account all resources, whether visible or “invisible”.
According to the World Bank, intangible assets represent 82% of the French economy. Intangible assets are key factors of value creation for a company, and can be divided into the following categories:
Why evaluate intangible assets?
Take the example of computer software: it is marked in accounting books by its purchase price, whether or not it is operational. If the software is efficient and creates value, it enriches the “informations systems” intangible assets of the company.
The evaluation of intangible assets of a company involves:
- Financial valuation of a company’s intangible assets
- Ensuring that the resources necessary for the long-term viability and performance of a company are in a good state
You are a company, an association, a public organization, or an administrative entity that wishes to:
- Use intangible asset evaluation to justify the valuation of the organization for the purposes of a sale
- Manage the quality of your intangible assets with defined improvement plans
- Measure the impact of a strategy or actions on the value of your organization
- Communicate transparently the true value of your company to stakeholders
- Conduct a detailed study on a strategic asset, for example human capital, information systems, etc.
If you are an investor, intangible asset evaluation facilitates the due diligence process by offering a global view of its strengths and weaknesses of a company in valuation.
How are intangible assets evaluated?
Since 2013, Goodwill-management has evaluated intangible assets of companies, developing deep expertise in this field in France and internationally through projects in Belgium, Morocco, and Senegal. As leaders in intangible asset evaluation in France, Goodwill-management is the principal author of Thésaurus-Capital-Immatériel, the standard for measuring intangible assets, commissioned by the Ministry of the Economy and Finance.
Alan Fustec, president and founder of Goodwill-management, is responsible for the scientific direction of the Observatoire de l’immatériel. Alan has taught intangible asset valuation methods for 12 years at grandes écoles in France such as HEC Paris.
Having completed numerous intangible asset evaluations, we have at our disposal a database which allows us to refine study results and adapt our calculations according to the specificities of your sector. Our methodology relies on two complementary approaches:
Qualitative extra-financial method
The first component of the Thésaurus-Capital-Immatériel method calculates a rating out of 20 to each of the intangible asset categories. The overall rating is given according to weights attributed to each of the assets.
Quantitative financial method
The second component of the Thésaurus-Capital-Immatériel allows for a financial valuation of the company.
A few case studies
- Capital Immatériel
- KI Entreprise