Company Valuation – Business is all about keeping score. Investors, lenders, and management need to evaluate performance and make decisions based on that evaluation. Our business valuation services include ESOP valuation, intangible asset valuation, company valuation, and more.
ESOP valuation
We have a team of exceptional analysts with experience in business valuation Singapore. We offer a wide array of services that are tailored to your unique needs.
Intangibles valuation is important for all companies that have acquired intangible assets, since the value of a company and its ability to realize significant future profits are largely dependent on its intangible assets. Intangible assets often have a greater impact than tangible assets on the value of a company, such as patents and trademarks, intellectual property and goodwill. Therefore, intangible valuations need to be performed periodically.
Multiple methods in which intangibles are valued
There are multiple methods in which intangibles are valued and the process depends on the nature of the asset being considered. For example, while estimating the value of patents we use Cost Approach, Income Approach and Market Approach. Cost approach focuses on replacement cost or cost savings that may be used as a result of acquired assets. Income approach focuses on expected future income flows from the asset to estimate the current worth of the asset. Market approach focuses on benchmarking against similar transactions in the market or publicly available information to estimate current worth of assets.
Valuation of Company’s intangible assets
The valuation of Company’s intangible assets is essential for IPO and other purposes related to corporate finance activities like mergers & acquisition, financial reporting, portfolio management and even for taxation purposes. The value of a company increases with its ability to realize significant future profits. This is why intangible valuations are required for business valuation services offered by our valuation experts.
Business valuations are the process of determining the economic value of a business for a defined purpose. There are several methods used to perform valuations, but there are three main approaches:
- Asset approach
- Market approach
- Income approach
Single method will accurately represent the true value
It’s important to note that no single method will accurately represent the true value of a business. The best way to determine its actual worth is to consider the results of all three approaches and compare them against your own observations and experience.
Intangible assets include things like patents, brand names, and customer lists that help the company create profits. However, the IRS will not allow you to deduct these intangible assets because they have no physical substance. The company can still assign a value to them if they are needed for financial reporting purposes, but these values are not recognized by the IRS.
Prior deductions
For example, if a company pays $1 million for a patent that has five years left on it, the company would use straight-line depreciation to deduct $200,000 each year over five years. This is because it has an expected useful life of five years. If an intangible asset is ever sold before its estimated useful life, the company must reverse any prior deductions and pay taxes on those amounts when they were deducted in previous years.
Business buys another business
If a business buys another business and some of its intangibles such as a trademark or patent are transferred from the old company to the new one, the IRS will allow a deduction for amortizing this purchase price over 15 years.
Intangible asset for small businesses
The most common type of intangible asset for small businesses are trademarks and copyrights. Most businesses would be unable to function without customers who recognize their trade names or without processes that have been patented so others can’t copy them.
Non-physical assets
Intangible assets are non-physical assets that have a value. They are something that you can’t touch but they have value and they help you earn money. To a business, they help in making the products or services of that business better than the competition’s.
Examples of intangible assets include:
Goodwill – an exclusive reputation which attracts more customers
Patents – for new inventions and processes
Trademarks – for company logos, slogans and other distinctive insignias
Copyrights – for text, photos or other original works
Trade secrets – information kept secret to help a company gain an advantage over competitors
Franchises – right to use another company’s business model in exchange for royalties
Licenses – right to use intellectual property owned by someone else in exchange for royalties
Brands – distinctive identity associated with a product or service.
