How Are Intangible Assets Valued?

Many aspects of a brand or a company are intangible. When selling your business due to property division as a consequence of divorce, it is vital that you understand the true value of your assets. It is often these intangible aspects that are the most valuable and important assets within a company. It could be the good reputation that took years to build, or customer databases that form the foundations of your marketing strategy. But how are they valued?

This blog will provide a brief overview into how different types of intangible assets are appraised and the how the value is sought. It will also give an overview of what types of assets are considered intangible.

Goodwill and reputation

A reputation among your customer base is hard to acquire. It might take years to build up a trusted community made up of customers, clients and vendors. For the measurement of this, the term "goodwill" is used. When valued, it is often done so together with other intangible assets, since it can be very difficult to judge in isolation.

Databases and proprietary lists

Lists can also take a large amount of labor and time to build up into something that can be vital for the business' growth and future. They are usually valued on what the cost would be to replace such a list, rather than on the amount of money the list or database generates.

Methodology and formulas

Methodologies that are followed by a company are not usually patented, but they provide a valuable and exclusive formula for success. An appraiser must value these types of assets to determine their value.

If you have any questions about the objective value of any of your businesses intangible assets, it's important to do research and seek legal guidance if you have any concerns.

Source: Findlaw, "Valuation of intangible assets," accessed Sep. 15, 2017