Intagible Assets - The Key To Your Company's Value
Every year, thousands of companies seek money from stock offerings,
mergers, joint ventures, and divestments. These are common options for
either raising operating capital or exiting the founders from a
project. In all of these cases, the valuation of the company is a
critical point. The valuation is the total worth of company's assets as
agreed upon between a seller and a buyer(s).
Two types of assets
influence the valuation of the company: tangible and intangible.
Tangible assets are real-world, physical items. They include cash, real
estate, machinery, equipment, inventory, and other things.
Intangible assets have value because of their implicit usefulness or
worth. They include such things as proprietary knowledge, processes,
and products; a desirable market segment, customer lists, and many
other items.
Intangible assets are a very intriguing subject for any entrepreneur
raising capital or interested in selling a business. Tangible assets
merely represent the dry facts of your company. Intangible assets are
the all-important emotional factor that excites an investor or
purchaser.
All Companies Have
Intangible Assets
If you are seeking start-up capital from investors, you probably don't
have a great deal to offer in the way of tangible assets. You may not
have real estate, equipment, or any inventory. However, what you do
have is your concept; this is an intangible asset. The management team
you select and your plan of execution are likewise assets that have
real value to investors. Even a new business may have well over a dozen
important intangible assets.
Established companies may underestimate the potential value of their
intangible assets. Do you have the inside track on an emerging market?
Is your company's name synonymous with quality? Are your personnel
highly valued within your industry? These and many other assets could
raise the worth of your company.
Intangible Asset
Management
A company can undertake a program to deliberately enhance their
intangible assets. This activity is called Intangible Asset Management.
Such a program concentrates on raising the perceived value of the
company for a very targeted audience: investors, partners, or
purchasers.
An Intangible Asset Management program would identify the key
intangible assets within the company and then determine if these assets
could be enhanced. Although few executives in small companies undertake
these programs, they should. A deliberate campaign to raise the value
of a company's intangible assets can have a startling affect on the
final valuation assigned by the market. We have all heard the stories
of companies acquired at fantastic prices that had little or no profit,
or even revenues! When this occurs, investors are paying a premium for
the intangible assets.
To successfully manage an enterprises's intangible assets requires a
special expertise. The process combines investment banking, product
development, and strategic planning skills with a dash of pure P.T.
Barnum! This is why it is unusual to encounter firms with a genuine
understanding of the process.
Valuation consultants with accounting or real estate backgrounds may
successfully appraise the value of intangible assets, but lack the
vision to help the client transform the assets into a more valuable
form. On the other hand, management consulting specialists may not
understand business valuation or how the investment process works.
Master Plan Strategies exists to fill this gap. The Company combines
business management and valuation expertises into a unique package. The
goal of these services is simple: To help clients plan for and
accomplish investments or divestments.
Copyright 2004 Master Plan Strategies, Inc. ALL RIGHTS RESERVED
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