• BusinessValuation

Valuing Intangible Assets

Almost any operational business would have intangible assets in one form or another. While the intangible assets cannot be seen, they still present a deal of value in a business.

First and foremost, an Intangible Asset is a business asset which has no material substance. Intangible assets can be found in all areas of a business.

Some form of intangible assets includes:

  • Technology, like technical manuals, engineering processes, computer software

  • Customer relationships

  • Contracts, franchises, licenses, and permits

  • Trained and competent workers

  • Customer relationships, including goodwill

  • Trade secrets, brand recognition, and proprietary business processes Marketing and advertising campaigns and materials

Use Them to Increase Value in the Sale of Your Business Goodwill is an important asset in the sale of a business. In a business sale, particularly one in which you are selling the business as a going concern, goodwill is the difference between the fair market price or book value of all the business assets and the sale price.

Other general intangible assets and intellectual property may also be valued and included in the selling price of a business.

Amortize Intangible Assets Amortization is a calculation which allows you to spread out the expense of an intangible asset over its useful life, instead of capitalizing it in just one year. Amortization works like depreciation. Having expenses in several years allows you to reduce your business income during these years, thus reducing your business tax bill.

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