While valuing a business, physical assets such as real estate, equipment, and vehicles are generally the first to come to mind. But Florida business owners preparing for a divorce should know that valuing a business will also include determining the value of assets that are more intangible in nature. This article will provide a look at some of the common intangibles that businesses own.
According to FindLaw, various forms of intellectual property, such as trademarks and brand names, count as intangible assets. In fact, they can be very valuable if the public identifies the brand names and trademarks with a quality product. A company that is popularly associated with a well known brand or trademark can charge a higher price for its products than competitors with less name value.
Over time, companies may build up a list of customers or subscribers. Businesses generally keep these lists for their own use, sell them, or buy a list from another company. A list is seen as very valuable if it represents an ongoing business relationship. For example, some businesses keep lists of companies that supply them with advertising. These lists may be valued on the cost it would take to replace the list or from the number of repeat sales created.
Businesses are also evaluated by their goodwill. In general, goodwill refers to the reputation of a company. Building a business from scratch entails establishing relationships with customers and the community that may take years to generate a loyal client base. A company with established goodwill, by contrast, is considered more valuable. The more willing clients and customers are to do business with a company, the more goodwill the company is judged to possess.
Some intangibles possess value that is more volatile. Trade secrets are often not patented and are valuated based on the cost savings or the profit advantages they offer. Also, as The Motley Fool points out, some intangibles have a use life that is finite, which causes them to lose value over time. Patents, for instance, can lose value as they near the end of their legal lifespan.
This is by no means an exhaustive description of the kinds of intangible assets a business can possess. The complexity of valuating a business may necessitate seeking out professional help to valuate your intangible assets, which can help you develop your high asset divorce case with the assistance of your attorney.