How do you value intangible assets?
Short Answer
Intangible assets are valued using one or more of six recognised methods: Relief from Royalty, Multi-Period Excess Earnings, Cost Approach, With-and-Without, Greenfield, and Market Approach.
Full Explanation
Valuing intangible assets requires selecting the right methodology for the asset type and context. The Relief from Royalty (RFR) method estimates what a licensee would pay to use the asset, making it ideal for brands, patents, and technology. The Multi-Period Excess Earnings Method (MPEEM) isolates the cash flows attributable to a single asset after deducting contributory asset charges — commonly used for customer relationships. The Cost Approach values an asset based on the cost to recreate or replace it, often applied to assembled workforce and proprietary software. The With-and-Without method compares business value with and without the asset. The Greenfield method models what it would cost to build the business from scratch with only the subject asset. The Market Approach benchmarks against comparable transactions. Opagio's AI Valuator applies the most appropriate method automatically based on the asset category and available data.
Try It Yourself
Related Glossary Terms
Related Questions
Intangible assets typically represent 70-90% of enterprise value in modern companies, directly influencing revenue multi...
The Relief from Royalty (RFR) method values an intangible asset by estimating the royalty payments a company avoids by o...
Brand value is most commonly measured using the Relief from Royalty method, which estimates what the business would pay ...
Want to see these concepts in action?
Discover how the Opagio Growth Platform puts intangible asset theory into practice.