Capitalised Intangible
Definition
An intangible investment — R&D, brand-build, customer-acquisition with proven payback, software development — that has been moved from operating expense to balance-sheet asset and amortised over its useful life under management accounting. Statutory accounting rarely permits the same treatment for internally-generated intangibles: IAS 38 imposes six conservatism criteria that are difficult to meet in practice; ASC 730 forces immediate expensing under US GAAP. The valuation gap between statutory EBITDA and capitalisation-reclassified EBITDA — what the market would amortise if it were buying the asset — is the structural unlock the Opagio Growth Accounting module operationalises. At a 7× multiple, every £1M reclassified to capitalisation typically widens enterprise value by £4M–£7M depending on amortisation period and Normative-EBIT calibration.
Complementary Terms
Concepts that frequently appear alongside Capitalised Intangible in practice.
An intangible asset created within the business (R&D output, brand, customer relationships, organisational know-how) rather than acquired through a transaction. IAS 38 conservatism rules make these difficult to capitalise on statutory books — six development-cost capitalisation criteria must all be met.
The US GAAP standard requiring immediate expensing of research and development costs as incurred. ASC 730 is the structural source of the gap between statutory and capitalisation-reclassified EBITDA for US-headquartered companies: virtually no R&D is permitted on the balance sheet, regardless of stage, evidence quality, or commercial proximity.
Tony Hillier's framework for estimating expected EBIT given a company's identified intangible asset base, benchmarked against sector peers with comparable asset profiles. Distinct from Normalised EBIT, which strips one-off items, owner adjustments and non-recurring costs to show the underlying run-rate; Normative EBIT goes further and answers 'what should this business produce given its assets.' The gap between Normative and Actual EBIT is the core analytical output: positive gap (Normative > Actual) means the company is under-exploiting its asset base — upside for a PE acquirer; negative gap means actual performance is unsustainably ahead of the asset base, flagging key-person, market-timing, or contract-pricing risk.
An analytical framework that decomposes economic or firm-level output growth into contributions from labour, capital, and a residual factor often interpreted as technological progress or total factor productivity. Growth accounting is fundamental to understanding how intangible investments — in R&D, software, organisational design, and human capital — drive productivity improvements.
A reconciliation document that maps founder-reported EBITDA to a Fund's maintainable EBITDA, identifying each adjustment per IPEV Section 3.4 with documented evidence. The bridge typically traces non-recurring spend, discontinued lines, one-time items, founder compensation normalisation, and pro-forma adjustments — each with source documentation (board minutes, contracts, payroll) and the known-and-knowable evidence flag.
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