VALUING

Tangible assets are easy to value. They’re typically physical assets with
HOW SENIOR INVESTMENT DECISION-MAKERS VIEW INTANGIBLES
finite monetary values, but over the years have become a smaller part
of a company’s total worth. As technology disruption continues, and A company’s intangible assets contain important information Conventional valuation methods such as discounted cash flow are
organisations increasingly rely on emerging developments in artificial about the future strength of its business model inadequate without thorough consideration of intangible assets The role of intangible assets in investment assessment

INTANGIBLES
intelligence, robotics and cloud computing, intangible assets have grown to
represent the lion’s share of corporate valuations. But without a physical 59% 41%
form and the ability to easily convert them into cash, working out what
95% 5% 88% 12% Intangible assets are an
increasingly significant
Intangible assets play the
same role in my assessment
these assets are truly worth can be challenging part of my assessment and and valuation of companies
Agree Disagree Agree Disagree valuation of companies as they have in the past
Columbia Threadneedle Investments 2019

900 0%
THE EIGHT KEY INTANGIBLE CATEGORIES THE VALUE OF INTANGIBLE ASSETS TANGIBLE VERSUS INTANGIBLE ASSETS COMPARISON
904 Microsoft 10%
800 839 Amazon.com
The majority of these categories can be protected The world’s largest publicly traded How companies on the S&P 500 have historically valued their tangible
by intellectual property, according to Aon companies by total intangible value, 675 Apple and intangible assets (in trillion dollars)
which includes goodwill, disclosed
521 Alphabet
and undisclosed intangible assets Tangible Intangible
20
409 Facebook %
AT&T

21.03
371
01

0.48
0.59

2.32
0

9.28
1.02
0.12

3.12
1.47
70
365 Tencent

4
361 Johnson & Johnson
INTELLECTUAL PROPERTY
348 Visa
Assets created of the FIVE BIGGEST
mind, such as patents, 344 Alibaba
COMPANIES
copyrights, trademarks 313 Nestle

30
and trade secrets Apple

%
305 Procter & Gamble
Alphabet
304 AB InBev
02 Microsoft

0
300 Verizon

60
Amazon
276 Comcast Facebook
B2B RIGHTS*
259 Mastercard
Rights of value generated
between businesses, 252 Novartis
such as royalty and 252 Walmart FIVE BIGGEST
03 licensing agreement COMPANIES

40%
245 Unitedhealth
235 Pfizer GE
BRAND*
Exxon Mobil
Value associated with Microsoft
consumer perception, Citigroup
SH
500

such as brand equity

) A Walmart

RE
04

($B

OF
LE VALUE
FIVE BIGGEST

ENTERPRISE
HARD INTANGIBLES* COMPANIES

50%
Assets that tend to sit on GE
balance sheets as a specific
Exxon Mobil

B
item, such as goodwill or

GI
05 software licences Coca-Cola

AN

V
Attria

A
LU

N
I
Walmart
E
DATA*
400

Stored information on
computer systems,
such as customer lists FIVE BIGGEST
Pfizer 98% COMPANIES

60%
Unitedhealth 94% IBM
06 Walmart 68% Exxon Mobil
Novartis 101% GE
NON-REVENUE RIGHTS Mastercard 99% Schlumberger
Assets that don’t tend Comcast 92% Chevron
to affect any revenue
Verizon 83%
generation, such as non-
30
0

competition agreements AB InBev 99%

07 FIVE BIGGEST
Procter & Gamble 101%
COMPANIES

%
89%

70
RELATIONSHIPS Nestle
IBM
Alibaba 86%
Value associated with Exxon Mobil
people/corporation Visa 100%
Procter & Gamble
networks 101%
Johnson & Johnson GE
Tencent 88%
08 20
0
3M
AT&T 84%
0%
PUBLIC RIGHTS Facebook 79% 8
Alphabet 65%
Rights of value generally in the
*Can be protected by public interest or government Apple 77%
intellectual property handled, such as planning 93%
100 Amazon.com
permission or drilling rights
Aon/Ponemon Institute 2019
Microsoft 90% 90% 1975 1985 1995 2005 2018
0 100% Brand Finance 2019 Aon/Ponemon Institute 2019