Paul Adams, CEO
In 1975, intangible assets accounted for 17% of the market capitalisation value for companies in the S&P 500. Today intangible assets account for 90% of company value. These assets—data, software, R&D, intellectual property, systems and processes, content and brands , among others— comprise almost three-quarters of all economic activity. If properly accounted for, they would raise the productivity and growth of businesses significantly. In fact, McKinsey & Co estimates that companies in the top quartile for growth in gross value added, a measure of economic growth—invest 2.6 times more in intangibles than low growers, companies in the bottom two quartiles.
Yet, intangible assets are largely absent from corporate financial accounts. Simply put most intangible assets never make the balance sheet, are listed under the catch all rubric of “good will” or simply listed at cost (which is problematic as there is virtually no correlation between cost and value with intangible assets, unlike their tangible cousins).
This relative absence of intangible assets from financial statements leaves many management teams in a position where they are unable to identify, assess, manage, or value these critical assets or the many and unique risks they present.
EverEdge Global, “the intangible asset specialists” solve this problem, helping companies and investors to identify, assess, strategize, value, and monetize their intangible assets., Established in 2007, EverEdge assists management teams, boards, and investors to mitigaterisk and unlock value from intangible assets through its unique approach to intangible asset valuation and management.
A Proprietary Model for Asset Valuation
EverEdge’s intangible asset valuation methodology, dubbed BenchMark™, is a proprietary three-factor model that combines traditional quantitative methods with contextual and qualitative factors. “Our assetvaluation model provides companies and investors with robust, defensible valuations that articulate the true value of a company with specific reference to its intangible assets or of individual intangible assets such as a brand, a patent, software code or a data set,” says Paul Adams, CEO of EverEdge. Such valuations are instrumental for companies raising capital, conducting M&A, in an exit process or liquidity event, undertaking license negotiations, involved in litigation, supporting tax planning, assessing R&D effectiveness, or setting pricing on new products or services.
To expose the true value EverEdge first identifies the intangible assets owned by a client. The company goes beyond simply cataloguingpatents and trademarks and digs deeper to identify valuable assets such as data, confidential information, software code, content, regulatory approvals, organizational relationships, industrial know-how and design rights, which are largely absent from traditional financial records or asset registers.
EverEdge then assesses the strengths and weaknesses of these assets,in particular what risks each asset is exposed to and how they should be protected. Every asset is exposed to risks. Yet because intangible assets are poorly understood by most companies, these risks are frequently under-estimated or mismanaged. “80% of the companies we see cannot even prove they own their intangible assets and major issues like this go directly to value” say Adams.
According to Tyler Capson, Managing Director – US at EverEdge, understanding thequality of a client’s intangible assets is also essential to accurate valuation: “trying to value intangible asset or intangible asset rich companies without actually understanding the quality of the assets leads to poor or inaccurate valuations – it’s like trying to value a car by reference to miles travelled but without checking it has an engine.”
Once the assessment phase is complete and the strategies to manage and protect the intangible assets are in place, then the valuation can be completed.
In our experience, many management teams do not understand the true value of intangible assets such as data, brands, content or software. That was ok in the 1970’s when intangible assets accounted for barely 17% of corporate value. Today, when that figure is 90% or more, it’s simply no longer viable to ignore these assets
EverEdge valuations go significantly further than traditional company or asset valuations, reviewing a broad array of factors and issues to ensure accuracy and robustness in what is often a poorly understood area. EverEdge’s reports tend to be more expansive, emphasizing prose, explanation, and evidence over endless, highly complex and easily manipulated spreadsheets. It’s valuations read as objective, defensible, business-focused reports that articulate and quantify the value of either the company with reference to its intangible assets or specific individual assets.
Based on a solid framework and incorporating multiple, well-researched factors these valuation reports enable EverEdge to help its clients drive better returns from intangible assets. This might include improved litigation outcomes, raising capital, negotiating licenses, more accurate pricing, or better values at liquidity events. For example,in the last three years the firm’s valuations have supported clients to raise over $1.6 billion in capital. To further assist companies in defending their valuations, EverEdge makes its team available for meetings with investors, tax authorities, counter-parties and other stakeholders.
A Long-Overdue Intangible Revolution
EverEdge has successfully undertaken more than 2,000 client engagements, including Fortune 100 corporations, institutional investors, governments, research institutes, and even start-ups, providing them with valuation services across all intangible asset classes. One such client, Swisslog Healthcare, a supplier of medication management solutions, approached EverEdge to assist them in selling its TransCar automated guided vehicle (AGV) business.
Although Swisslog Healthcare had an exceptionally strong team of innovators within the organization, many of the assets ithad developed over the years were outside the company’score business. Working alongside the client, EverEdge developed a strategy that played to the client’s strengths in the healthcare sector. Capson added, “A clear understanding of the client’s business enabledus to identify the right acquirer (in this case Singapore-based technology firm OTSAW) and support the company through the transaction process. The result was that the client was able to transfer an otherwise difficult to monetize non-core asset to a partner capable of maximizing the future potential and value of that asset.”
Such success stories stem from EverEdge’s deep understanding of the unique features and issues around intangible assets and their impact on the valuation process. “Intangible assets are not just invisible physical assets. They behave in fundamentally different ways, which has a profound impact on the way these assets are valued, and the skill sets you need to value them accurately” says Adams.
EverEdge’s has extensive experience and knowledge across multiple disciplines,such as technology, finance, law, and intellectual property and its team includes patent attorneys, engineers and scientists as well as brand, data, software and content specialists.
Preparing for a New Reality
Going forward, EverEdge plans to continue to develop its ground-breaking valuation techniques and methodologies. The company has recently expanded its services by adding a corporate finance division that completes buy and sell side mandates involving intangible asset rich companies or individual assets or portfolios.
Our proprietary valuation model essentially helps companies and investors identify, assess, strategize, alue and monetize their intangible assets and articulate their true value
EverEdge has maintained its track record of strong growth through pandemic and anticipates further strong growth as the world recovers in 2022.
“We continue to upgrade our intangible asset valuation capabilities and bring new techniques and expertise to market to enable our clients to have greater confidence in the value of their most important assets: their intangible assets” concludes Adams.