Chapter 5
The Challenge of Valuation in a Knowledge Economy
In This Chapter
The dominance of intangible assets in businesses large and small
Idea-based valuation
Ways to determine intangible value
How to safeguard intangible value for the future
Business valuation was a lot easier 50 years ago. In the days before computers, the Internet, and armies of people working as consultants, valuation was linked much more clearly to countable items: tools, machinery, facilities, office furniture, units produced, you name it.
Those countable items may still exist within a company, but a higher value is often placed on the brainpower within a company â not only the traditional intangibles of patents and brands but also the strategic focus of a firm, its product development process, and the attractiveness of its leaders and their ability to produce talented future leaders just like them.
Todayâs economy may be called a knowledge economy â but exactly how do you value knowledge? The truth is there are many ways to value all kinds of assets. But as knowledge and skills gather more importance in companies, the valuation of these intangibles is worth discussing in depth. Read on.
Moving from a Hard-Asset to an Intangible-Asset Economy
No matter how you feel about former Federal Reserve Board Chairman Alan Greenspan, he definitely had a way with a line. In 1999, he told an audience in Grand Rapids, Michigan, about this major change in the U.S. economy:
âThe quintessential manifestations ...
