What are Intangible Assets and What to Do with Them
How do you value a business? Many business owners only contemplate this question when beginning to consider selling their company. Up and until this time, too many operators only look to protect their physical assets from potential loss. Buildings, equipment, and vehicles are easy to appraise with a broad insurance market ready to insure them.
But there are the “invisible” assets often overlooked and which could be more valuable than any structure, machine, or automobile – intangible assets.
Practically every business has intangible assets that if compromised, could submarine even the most robust company. In fact, according to Forbes, intangible assets can account for up to 80% of a business valuation. [i] Smaller businesses or new business start-up could see their intangible assets account for an even higher percentage of their value.
Intangible assets are property that is not physical in nature. Examples of intangible assets include:
- Trade Secrets
- Domain Names
- Phone Numbers
- Broadcast Rights
- Service Contracts
- Customer Lists/Data
- Franchise Agreements
- Non-Compete Agreements
- Branding (Artwork, Slogans, etc.)
While many intangible assets cannot be insured, there are those which can indeed be insured. Unfortunately, it would be incorrect to believe your general liability, property, or other common business insurance policy provides coverage.
Instead, businesses can purchase specialized insurance to protect certain intangible assets from theft, infringement, or misuse. At risk are the potentially large legal costs to pursue allegations against individuals or companies using a business’s intangible assets without permission. Additionally, coverage can be added to recoup lost income, repair damaged reputation, or defense if your business is accused of infringement.
A large of percentage of your company’s value may be attributable to the organization’s intangible property. If the backbone of your business rests on the untouchable assets you own, contact our office today to learn how you can protect your business long-term success.