If you're thinking about selling your SME, one of the most important steps is working out what it's worth. Appraising tangible assets doesn't usually involve major complications. However, many business owners don't value, don't take into account, or haven't identified another type of asset that is just as important, if not more so: intangible assets.
According to a report by the consultancy Brand Finance, last year intangibles accounted for almost a third of the total value of Spanish companies. Their weight has certainly fallen (nine points in one year) due to economic uncertainty, but as you can see, it is still significant.
Intangible assets in a company: what they are
So what are a company's intangible assets? As the name suggests, they are non-physical assets: you can't touch them because they aren't material, but they do represent economic value for the company.
Requirements for an asset to be intangible
An intangible asset must meet three requirements: it must be identifiable, it must be controlled, and it must provide an economic benefit.
Identifiability
This means the asset can be transacted, that is, it can be sold, assigned, or leased, which means the intangible asset is separable.
Control
The company must be able to exercise rights over the asset and make some kind of claim on it, as is the case with patents or royalties.
Benefit
The asset must contribute some economic benefit to the company's balance sheet. For example, cost savings, increased productivity, or synergies.
What types of intangible assets are there?
Intellectual property
This includes patents, trademarks, copyrights, and trade secrets, among others.
Patents are exclusive rights granted by the authorities that protect the organization's inventions for a specific period of time.
Your brand, if you've invested in it, is a distinctive sign that provides identity and prestige in the market.
Likewise, copyrights are relevant depending on your sector, since they legally protect your work.
And finally, trade secrets range from a formula to a customer portfolio, including the particular way you carry out a process in your company.
Reputation
This represents the company's prestige and the loyalty of its customers and suppliers, among others.
Technology
This covers all intangible assets such as software developed by a company, the hardware it has, or technology patents.
Business relationships
These are the relationships you maintain with all your stakeholders: customers, suppliers, partners, and distributors.
Talent
This is the knowledge and experience of your employees, and it includes any confidentiality agreements that have been signed.
Research and development (R&D)
R&D expenses should be included, as well as those related to innovation in the sector.
Contracts and agreements
This includes license or franchise agreements, as well as distribution agreements.
Goodwill
This is a company's ability to generate future profits through its employees, customer loyalty, or patents, among other things.
Marketing
This is a value that is often overlooked, especially if you've carried out SEO positioning and online marketing strategies. Promotions of services and products are also considered.
Permits and concessions
This covers all the red tape you had to go through to obtain your operating permit or the licenses to operate in certain sectors.
How do intangible assets help increase a company's value?
We can highlight the following:
Revenue
The first, without a doubt, has to do with increased sales through new lines of business, such as franchising the business, bringing a patent to market, generating copyright income, or having a brand strong enough that customers are willing to pay more for a product or service.
Productivity
Today, in one way or another, software helps increase productivity by making processes more efficient. Technologies such as artificial intelligence and its automation capabilities reduce manual tasks and help professionals streamline their work and make faster decisions.
Lower costs
Alongside the above, the efficiency of software also helps companies reduce costs, which boosts their competitiveness.
As you can see, it's very important to identify your company's intangible assets so you can highlight their value and use them as a lever for growth. If you've already identified them and have them under control, you can value your business here in two minutes, free of charge and confidentially.
