With the change in technology, there is growth of the digital world which comes with many changes. Currently, a growing number of companies have assets in the form of intellectual property or things that are intangible such as ideas or brands. It is however common for those companies to have physical assets as well. The good part is that even though something may happen to the physical assets all they will have left are intellectual property.
When doing the valuation of a company, most valuers forget that intellectual property is in the equation. Intellectual assets include trademarks, copyrights, trade secrets and patents among many others.
Trademark: This is a symbol, design, phrase or emblem that has been uniquely made to represent your company. Mostly they are used in representing your company as a brand and you will see them in products. When a trademark is used without authorization without the owner it’s against the law. Most of the time a counterfeit may try to imitate the trademark. In case of trademark damage, the actual damages are calculated and that needs valuation prior.
Patent: When it comes to patents, they are granted by the government giving a company a period of time to create, use or sell an invention while incorporating the patent. If there is an entity which will attempt to use a patent without authorization that is patent infringement and is illegal. Patent infringement will cause the owners of those rights to drop in performance such as lose sales. In case you experience patent infringement you will need professional counsel to get the right compensation for damages.
Copyright: This is what gives an owner exclusive rights on original works. Copyright protection is mostly common with pieces of art, software, music and photographs among many others. Copyright infringement is against the law.
Trade secrets: These are intangible assets only that they do not fall under intellectual property and hence cannot be protected as a form of intellectual property. These kinds of assets are referred to as trade secrets. It can be defined as a unique formula, process, design, pattern that gives a particular business competitive advantage since it is only known to the company. Just like other forms of intellectual property, individuals or companies can steal them and use them to benefit themselves. Good thing is that they can be protected.
Do you need valuation?
Valuation is very important for a company and not only should the tangible assets be valuated but also the intangible assets as well. It is through valuation that you can determine the position of the company especially if you are looking for investors and if you want to be ahead of your competitors. It is through valuation that you will be able to achieve compensation for any loss that you may experience or rights infringement. There are also some agreements that need valuation such as mergers, buy-sell agreements and acquisitions. Since valuation is mandatory, it is important that it is done by experts such as Rawls, Scheer, Clary, Mingo.