"However, alongside these tangible indicators sits another layer of value, one that does not always surface cleanly in financial statements and may even remain invisible if it is not properly understood or articulated: Put simply, intangible assets are the non-physical elements a company has built that enable it to generate revenue, scale efficiently, or defend its market position. In technology companies, this typically includes proprietary software, intellectual property, datasets, customer relationships, brand equity, and internal systems or processes."
"Many of these assets do not fully appear in financial statements. Others are only partially captured through accounting treatment. Yet in a transaction context, they often influence how sustainable, transferable, and defensible a company's performance really is. Understanding how tangible performance and intangible value interact, rather than compete, is key to interpreting how modern technology deals are ultimately priced. For founders in particular, recognising and articulating this invisible layer of value can meaningfully influence how buyers assess upside and risk."
Financial performance, growth efficiency, and cash flow durability form the core basis for valuing technology businesses, with metrics like revenue, ARR, retention, margins, and capital intensity anchoring pricing. Intangible assets represent non-physical resources—proprietary software, intellectual property, datasets, customer relationships, brand equity, and internal systems—that enable revenue generation, efficient scaling, and market defense. Many intangibles are underrepresented or absent in financial statements yet materially affect sustainability, transferability, and defensibility of performance in transactions. Valuers must integrate tangible metrics and intangible value to assess risk and upside accurately. Founders can influence acquisition outcomes by identifying and articulating these intangible assets.
Read at TNW | Business
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