Evaluating intangible assets for businesses is a critical but challenging task due to their lack of physical properties. These assets – including brand recognition, intellectual property, patents, trademarks, and goodwill – can take years to establish but are vital to the success of many businesses. For instance, Apple invests heavily in managing and protecting its brand recognition, which is one of the most valuable in the US, while licenses and registrations can also increase a business’s value when appropriately registered and developed over time.
Mid-market business owners frequently undervalue the importance of intellectual property, which encompasses intangible creations of the human intellect like proprietary knowledge, new ideas, inventions, or designs. Large companies typically acquire IT businesses for their proprietary technology, which they can leverage to enhance their value. However, intellectual property can also include unique processes or methodologies that can substantially increase a business’s worth.
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If you’re planning to exit your company in the near future, you may find EastWind’s Exit Strategy Playbook helpful in developing your own exit strategy, making your company more sellable.
The value of intellectual property lies in its application to a significant target market and its perceived value to customers. Businesses that can establish ownership of unique intellectual property that is accessible and valuable to a significant target market are highly valuable. Furthermore, the value of intellectual property often lies in how well it can be commercialized and how it can benefit customers. Companies that can successfully leverage their intellectual property and integrate it into their products or services generally sell for the highest possible value.
We are currently working with several clients using our 21-step process that helps clients understand the value of their business and comprises five stages:
- Identifying value by determining the starting point, including business valuation.
- Protecting value by ensuring proper risk management and asset protection are in place.
- Maximizing value by ensuring business value is maximized and the business is prepared for a business succession plan.
- Extracting value through a liquidity event or transaction.
- Managing value post-sale or exit by ensuring assets are protected, and value is invested to fund retirement.
Want to learn more? Book a clarity call with Tim https://calendly.com/tim-fawcett/30min
ABOUT THE AUTHOR
Tim Fawcett CEPA CAP CMEA
EastWind Business Solutions Inc.
tim.fawcett@eastwindinc.ca
Tim Fawcett, the founder and managing director of EastWind Business Solutions, Inc., a merger and acquisition advisory firm that specializes in strategic sales of SMEs valued at $2M-$100M+, has provided strategies to over 2,000 baby boomer business owners in Canada and the USA, helping them accelerate their value and prepare their businesses for sale, and guiding them through best practices in exit planning.
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