We value identifiable intangible assets for transactions, licensing, intra-group transfers, financial reporting, tax and disputes. Every intangible valuation starts by defining exactly what the asset is and who owns it, because a vaguely defined asset cannot be reliably valued.
When is this valuation required?
- A brand, technology or other intangible is being sold or transferred within a group.
- Intangibles must be recognised following an acquisition (purchase price allocation).
- An intangible asset is being licensed and a royalty needs to be supported.
- A business needs to test intangibles for impairment.
- The value of an intangible is in dispute or relevant to proceedings.
- A lender or investor wants to understand the value of the intangibles behind a business.
Who instructs us?
- Companies, boards and finance directors
- Auditors' clients and accountants
- IP owners and licensing teams
- Corporate, IP and litigation solicitors
What exactly is valued?
Identifiable intangible assets are those that can be separated from the business or arise from contractual or legal rights. Common examples include trademarks and brands, software and technology, customer contracts and relationships, licences, franchises, patents and copyrights. Goodwill is different: it is the residual value of the business not attributable to identifiable assets, and is valued on its own terms.
How is value assessed?
The income approach is most often used: the asset is valued by reference to the financial benefits it generates. Specific methods include relief-from-royalty, which values an asset by the royalties its owner avoids paying by owning it, and the multi-period excess earnings method, which isolates the earnings attributable to one asset after charging for the contribution of the others.
The market approach uses transactions in comparable assets or royalty rates where reliable evidence exists. The cost approach estimates what it would cost to recreate or replace the asset, and is often used for assembled workforces or internally developed software where income cannot be separately identified.
How the approaches are usually weighed
Typical
- IncomeRelief-from-royalty and excess earningsUsual starting point
- MarketComparable assets and royalty ratesCross-check
- CostCost to recreate or replaceWhere relevant
Questions every intangible valuation must answer
Before any method is applied, we establish the basic facts that determine whether a reliable value can be reached.
- What exactly is the asset, and where are its boundaries?
- Who legally owns it, and can it be transferred?
- How does it generate economic benefits, and for how long?
- What legal protection does it have, and what are the risks to it?
- Are there contractual restrictions on its use?
- What costs are needed to maintain it?
What factors influence the result?
- Legal protection
- Registrations, contracts and enforceability.
- Useful economic life
- How long the asset will continue to generate benefits.
- Attributable earnings
- How much of the business's profit genuinely comes from this asset.
- Market evidence
- Availability of comparable transactions or royalty rates.
- Transferability
- Whether the asset can be separated from the business and its people.
- Maintenance costs
- Marketing, development or renewal costs needed to sustain it.
What information is required?
- A description of the asset and evidence of ownership
- Registrations, licences and relevant contracts
- Revenue and profit attributable to the asset
- Forecasts for products or services using the asset
- Development and maintenance cost history
We send a tailored information request once the scope is agreed.
What report will you receive?
Reports define the asset, record its ownership and legal status, explain the method and assumptions including economic life, royalty rates or contributory asset charges, and state the value on the basis required for the purpose.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Intangible valuations usually take longer than straightforward company valuations because the asset has to be identified and its cash flows separated from the rest of the business. The timetable is confirmed during scoping.
How much does it cost?
Fees depend on the number and type of assets, the purpose and the available information. We confirm the scope and fee before starting.
How our fees are set →Frequently asked questions
What is an identifiable intangible asset?
An asset without physical substance that can be separated from the business or arises from contractual or legal rights, such as a trademark, software, a customer contract or a licence.
Is goodwill an intangible asset?
Goodwill is intangible, but it is not identifiable in the same way. It represents the value of the business not attributable to other identifiable assets, such as the assembled workforce and expected synergies.
What is relief-from-royalty?
A method that values an asset by estimating the royalties the owner would have to pay to license it if they did not own it, and calculating the present value of those avoided payments.
Does every intangible appear in the accounts?
No. Many internally generated intangibles are not recognised. Accounting recognition depends on the framework and the circumstances, and is often triggered by an acquisition.
Can you value an intangible that is not yet earning revenue?
Sometimes, using cost or forecast-based approaches, but the uncertainty is greater and the report explains the assumptions and their limitations.
