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Valuing Intangible Assets
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When one company buys another, the buyer is required to report the value of the target’s intangible assets.

Orchard Partners has the expertise to identify which assets are to be valued and to provide the auditor with convincing evidence to support its valuation opinion.

Our appraisals have passed the scrutiny of the major accounting firms and the SEC.

Issues to Consider in Intangible Asset Valuation

ASC 805 identifies types of intangibles the acquirer should consider when conducting an intangible assets valuation. These include:

  • Marketing-related assets, such as trademarks, trade names and non-competition agreements
  • Customer-related assets, such as customer lists and customer relationships
  • Contract-based assets, such as licensing agreements
  • Technology-based assets, such as patented technology and software, and
  • Artistic-related assets.

The valuation of these assets may involve methodology and nomenclature that is not familiar to first-time acquirers: the relief from royalty method, the multi-period excess earnings method, contributory asset charges, and so on. To complicate matters, the acquirer may need to value acquired liabilities as well, such as deferred revenues or an earn-out agreement.

The valuation of intangible assets also plays a role in the annual test for goodwill impairment under ASC 350 (formerly FAS 142). The value of previously unrecognized intangible assets must be considered when determining if goodwill is impaired.

From Our Blog

9/24/2013 2:40 PM
Should We Value Intangibles? How?

Compare the balance sheets of three companies: Pacific Gas & Electric, Wal-Mart and Google.  You’ll find that the assets listed by PG&... (more)