When should a company get an intangible asset valuation?

Full Explanation

There are several trigger events and ongoing requirements that necessitate intangible asset valuations. Mandatory triggers include: business combinations (IFRS 3/ASC 805 require PPA for all acquisitions), annual goodwill impairment testing (IAS 36 requires testing at least annually), and interim impairment testing when triggering events occur (significant revenue decline, market downturn, loss of key customer). Tax-related triggers include: transfer pricing documentation for intercompany IP licensing, R&D tax credit claims requiring valuation of developed intangibles, tax amortisation planning to maximise deductions, and estate or gift tax valuations of business interests with significant intangible value. Litigation and dispute triggers include: intellectual property infringement damages calculations, shareholder disputes requiring business valuation, divorce proceedings involving business ownership, and insurance claims for intangible asset losses. Strategic triggers include: pre-sale preparation to understand and maximise intangible asset value, secured lending where intangible assets are offered as collateral, partnership or joint venture negotiations, and board-level reporting on intangible asset performance. For growing companies, obtaining a baseline intangible asset valuation before it is urgently needed provides strategic advantage. Understanding what drives your intangible value — and where the gaps are — enables focused investment in the assets that matter most to future growth and exit value.

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