Intangible Asset Valuation - Valuing Customer Relationships
Intangible asset valuation is a complex process. Though these assets do not have any physical substance, they are at the heart of any business's success. Some examples of intangible assets are Trademark, Brand Name, Software, Technology, Customer Relationships, and Goodwill.
In this article, we focus on valuing customer-related intangible assets, which arise out of an ongoing and ever-evolving relationship between an entity and its customer. This relationship may be formal (contractual) or informal or merely based on an entity possessing relevant information about its customer.
There are several evaluation approaches such as Income Approach, Market Approach, Cost Approach, etc. which help in determining the value of intangible assets. However, identifying the right approach may be perplexing.
Our article provides an in-depth understanding of the valuation approaches that can be used to value customer-related intangible assets as well as the most appropriate situation to use each one.