How much of a company's value is intangible?
Short Answer
For S&P 500 companies, over 90% of market capitalisation is attributed to intangible assets. For typical SMEs, the proportion ranges from 50-85% depending on the industry and business model.
Full Explanation
The shift from tangible to intangible value has been one of the most significant economic transitions of the past 50 years. According to Ocean Tomo's annual study, intangible assets represented just 17% of S&P 500 market value in 1975, rising to 32% by 1985, 68% by 1995, 80% by 2005, and over 90% by 2020. This trend is not limited to large-cap tech companies — even in traditional industries like manufacturing, intangible assets (brands, customer relationships, proprietary processes, and know-how) represent the majority of enterprise value above book value. For SMEs, the proportion varies significantly: technology companies typically have 70-90% intangible value, professional services firms 60-80%, and manufacturing companies 40-60%. The challenge is that most of this value is invisible on the balance sheet because accounting standards only recognise intangible assets that are acquired (through M&A) or meet strict capitalisation criteria. This creates what Opagio calls the 'intangible value gap' — the difference between true enterprise value and reported book value.
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Further Reading
Brand Valuation: Methods, a Worked Example and Brand Equity vs Brand Value
Brand valuation turns a brand's market strength into a defensible number. This guide separates brand equity from brand value, works a relief from royalty example through to the pound, compares the other methods against IVS 210 and ISO 10668, and explains when a brand is recognised in the accounts.
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