1. Advocates & Legal Consultants
PURPOSES AND USES OF INTANGIBLE ASSETS VALUATION
Intangible assets are defined as identifiable non monetary assets that cannot be seen, touched or
non-monetary
physically measured. Intangibles assets have no physical existence and are incapable of being
perceived by the sense of touch, as an incorporeal, immaterial and impalpable thing.
Intangible assets are categorized under different heads for the purposes of identification and
classification. A common categorization of intangible assets follows.
1. Marketing related intangible assets. Includes trademarks, trade names, logos, brand names
2. Technology related. Includes patents, technical know
know-how
3. Artistic related. Includes copyrights, literary works, musical compositions
4. Data processing related. Includes computer software, software copyr
copyrights
5. Engineering related. Includes industrial designs, product patents
6. Contract related. Includes license agreements, non compete agreements
7. Goodwill related. Includes professional goodwill, celebrity goodwill
Intangible assets are created over a period of time and attain a value for themselves. Intangible
assets are an integral part of the business and hold a lot of value in the valuation of the business.
One of the reasons intangible assets are so important is because they can be converted to tangible
assets and ultimately generates revenue out of them, like books, software products, patents and
inventions can be converted to tangible assets.
Intangible asset valuations and economic analyses are performed for transactional as well as
notational purposes. Valuation of intangible assets is required to be done for various purposes.
Purposes and uses of intangible asset valuation can be broadly categorized into the following
heads;
1. Financial reporting
2. Infringement damages
3. Sales transaction support
4. Transfer pricing
5. Licensing
6. Equity raising
7. Strategic alliances
8. Collateral-based financing
based
9. Transaction pricing and structuring, for the sale, purchase o license of the intangible asset
or
10. Financing securitization and collateralization
11. Taxation planning and compliance
12. Bankruptcy and reorganizational analysis
13. Litigation support and dispute resolution
14. Corporate planning and governance
15. Acquisitions, mergers and sales of businesses, licensing

2. 16. For bankruptcy and reorganization
17. Purchases and sales of intangible assets
18. For the purposes of tax
19. Financial reporting
Valuation of intangible asset is done for various purposes. When a business entity goes under a
merger and acquisition deal or sells off part of whole of its business, the other party wants to
assess the value of the assets of the company. The value of intangible assets forms an integral
part of these deals. Assessment of intangible assets is also done for raising of funds for the
business. It acts as a property against which the company can raise funds from the bank and other
institutes. In a legal case for infringement of IP by other party valuation of assets is required to
assess the value of compensation and damages demanded from the other party. Goodwill is
another form of intangible asset. Goodwill cannot be separately termed as a property but
goodwill earned by a business enterprise over the period of time does value and is assessed for
licensing, M&A and other deals. Valuation of intangible assets is also required to be done for the
purposes of tax.