In these recent years, you may recognise a similar pattern. We are presented with statistics which show that most high-profile “New Age” companies such as Facebook, Netflix and Booking.com do not own a lot of physical assets.
For instance, Netflix does not own most of the content made available to be streamed online and Booking.com does not own the accommodations listed on their site. Instead, new-generation companies rely on their intangible assets such as unique business methodologies, database of its users, and of course intellectual property (IP) which may consist of trademark, patents, copyright and designs.
Although the awareness of intangible assets are not yet widespread, they are actually more valuable than physical assets; especially for an innovation-based start-up company. Intangible assets will give a company a competitive edge over their competitors and will create customer value, as well as shareholder/stakeholder value.
Trademarks through company branding has a deep influence on customers’ decision-making processes, and companies are able to justify the premium prices being charged. This ensures enhanced effectiveness of advertising and marketing efforts to build trust and increase customer loyalty. Patents, on the other hand, work to ensure that companies protect their inventions from unwarranted exploitation.
Intangible assets also have a strong impact on financial statements. A business with a wealth of intangible assets are actually worth a lot more, but because the values of these assets have not been assessed, they are not reflected on the company’s balance sheet. Hence, proper quantification of intangible assets have a pivotal impact for companies hoping to raise funds or undergo mergers or acquisitions.
In order to protect your valuable intangible assets, you must first recognize the types of intangible assets you own. If the types of intangible assets you own are IP rights, you must ensure that these rights are protected, and this can be done through IP registration. Secondly, you must ensure that your intangible assets are properly valued and assessed. There are several methods to do this, such as cost, market and income methods.
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