Information Asymmetry

A comprehensive document prepared by the seller's advisors in an M&A sale process that provides prospective buyers with detailed information about the target business, including its history, products and services, market position, financial performance, management team, growth opportunities, and key risks. The IM is distributed to shortlisted parties after they have signed a non-disclosure agreement and is designed to enable buyers to form a preliminary valuation and submit indicative offers.

A contractual arrangement in which one party agrees not to engage in competitive activity for a specified period and within a defined geographic area. Non-compete agreements are recognised as identifiable intangible assets in purchase price allocations and serve to protect acquired customer relationships, trade secrets, and human capital.

A performance benchmark for SaaS and subscription businesses stating that the sum of revenue growth rate and profit margin should equal or exceed 40%. The Rule of 40 balances growth and profitability and is widely used by investors to assess whether a company is creating sustainable enterprise value.

The commercial value derived from consumer perception of a brand name. Brand equity is one of the most significant intangible assets for consumer-facing businesses and influences pricing power, customer loyalty, and market share.

A legally binding contract that establishes confidentiality obligations between parties sharing proprietary information. NDAs are essential tools for protecting trade secrets and other sensitive intangible assets during due diligence, partnership discussions, and employee onboarding.

The process by which private equity and venture capital firms identify, evaluate, and originate potential investment opportunities. Effective deal sourcing increasingly relies on proprietary data, network effects, and reputation — all intangible assets that distinguish top-performing funds.

A valuation methodology that estimates the value of an asset based on observed prices in actual market transactions involving comparable assets. The market approach is used to value intangible assets when reliable transaction data or licensing royalty rates are available, and is one of the three primary approaches alongside the income and cost approaches.

The practice of valuing assets at their current market price rather than their historical cost. Mark-to-market accounting provides a more timely view of portfolio value but can introduce volatility, particularly for intangible-heavy investments where market prices may fluctuate significantly in response to sentiment and information flow.