INTANGIBLE ASSETS AND PRINCIPLES FOR THEIR EVALUATION

INTANGIBLE ASSETS AND PRINCIPLES FOR THEIR EVALUATION

1. FAROK J. CONTRACTOR

   • When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind: it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.

2. LORD KELVIN

   • When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind: it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.

3. WHEN DO INTANGIBLE ASSETS NEED TO BE VALUED?

   • There are several principal business circumstances in which intangible value needs to be measured.
     • 1. A company sale, merger, or acquisition.
     • 2. Sale, purchase, or licensing of separable assets such as brands, patents, copyrights, data bases, or technology. “Separable assets”are those that can be detached from the company that possesses them and transferred, sold, or licensed to another firm.
     • 3.Lawsuits involving intellectual property infringement. Here courts need to determine infringement costs and penalties.
     • 5. Corporate alliances. During negotiations over the formation of a joint venture (JV) or the many other forms of strategic alliances such as management service contracts, franchising, ...and co­marketing, the valuation of the knowledge contributions of each partner is a key issue.
     • 6. R&D management. Putting a value on prospective future knowledge generated by R&D investments is key to selecting between competing R&D projects. Valuing each partner’s contribution in co­development projects is another crucial measurement area.
     • 4.Tax liability calculations in the context of transfer of intangible assets and technology to affiliated firms, possibly in another nation.

4. THE NATURE AND ATTRIBUTES OF INTANGIBLE CORPORATE ASSETS

   • TYPES OF CORPORATE KNOWLEDGE
     • Tipo I
       • These comprise formally registered Intellectual Property Rights, such as patents or brand names.
     • Tipo II
       • Intellectual Assets, which comprise both the above registered property rights as well as codified but unregistered corporate knowledge.
     • Tipo III
       • uncodified Human and Organizational Capital, or expertise that resides in the thinking of employees and in organizational routines.

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