Evaluating Intangible Assets in Capital Investment Decisionmaking

摘要

For growth firms in emerging industries, intangible assets are apt to be thecrucial element for success. The research summarized in this report identified and developed techniques for analyzing the value of intangible assets. After reviewing the literature on evaluation of intangible assets, the authors focused on developing a methodology for estimating the value of a portfolio of intangible assets owned by a closely held company. The return-on-assets (ROA) methodology that was developed compares a firm's average return on tangible assets to the industry average ROA. Where the company's ROA exceeds the industry average, the excess amount is the basis of a calculation to arrive at an estimated value of the company's intangible assets. This methodology was verified against value ascribed by the market in initial public offerings. The final phase of the project was a demonstration of the methodology to five lenders using five small, closely held firms as examples. The lenders acknowledged the growing importance of intangible assets.