Intangibles. What Makes Them Valuable?

It does seem odd that something you cannot see, feel or taste can have value, but intangibles, in certain instances can have great value in a sale. We can all relate to hard assets such as land, buildings, cars, or equipment, but intangibles are harder to quantify. Trademarks, patents, copyrights, and goodwill are a few examples of intangibles we deal with in the business world. Have you ever thought about what makes intangibles valuable?

When selling an accounting firm or tax practice, most of the firm’s value will be attributed to its goodwill. Why is this true? Because a buyer is basically purchasing a stream of revenues, evidenced by a list of client names. This value can be enhanced by a business operating from the same location for many years, or by having long term employees the clients are bonded with. Many factors affect a firm’s value: location, mix of revenues, cash flow to the owner, etc.

If you are interested in discussing your firm’s value, we are happy to provide you with a free market analysis. Contact us today to start the process!

About the Author

Picture of Kathy Brents
Kathy Brents
Kathy is a life-long resident of Central Arkansas, where she received her undergraduate degree in accounting from the University of Central Arkansas. Upon graduation, Kathy worked for CPA firms in the Central Arkansas area prior to starting her own CPA firm in Conway, Arkansas in 1986. While practicing public accounting, Kathy had many opportunities to provide guidance to her clients as they were involved in the purchase and sale of many businesses. Kathy sold her own CPA firm in 2006. In 2004, Kathy began her 2nd career in the field of business brokerage. Kathy is also a Certified Business Intermediary (CBI) and a member of the International Business Brokers Association (IBBA).

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