Too often when people are getting ready to sell a business they forget to include the value of intangible assets in their sales price.  While intangible assets do not appear on balance sheets they’re crucial to accurately calculating a company’s value and sales price.

“Generational Equity has identified more than forty intangible assets that should always be considered and evaluated before selling a business,” says Generational Equity President Ryan Binkley. “Anyone who fails to take these into account is leaving real money on the table.”

“For many businesses intangible assets are the reason the phone rings or customers walk in the door,” says Ryan Binkley.  “These can include anything from patents for unique products to a loyal customer base or knowledgeable staff.”

Intellectual capital includes the informational resources a company has that are used to drive profits, retain current customers, gain new customers, create new products or otherwise improve the business.

For example, a company with specialized products that has been in business for many years and has a loyal customer base has more value than a company without these assets. If you add in a knowledgeable staff known for providing sound advice and expertise you have an important asset that can add to the sales price.

“As part of our work positioning a client’s company for sale, we make sure that key employees, copyrights, patents, mailing lists and management will remain in place following the sale,” says Ryan Binkley.

“The reason many people invest in franchises is that the investor gets a business with systems, suppliers, advertising and name recognition already in place,” notes Ryan Binkley.  “However, an individual business often also has these same systems, processes, suppliers and name recognition, and should receive value for those assets along with more tangible assets such as equipment and buildings.”

“For some of the companies we have worked with the intangible assets have increased the value of the firm significantly compared to others in their industry,” said Ryan Binkley.

A list of intangible assets to consider can be found here.