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 just are very warm and fuzzy.  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!

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