Intangible Capital Value

Our core business: intangible capital valuation

Quality Assurance and Compliance

ICV Compliance with IPEV Guidelines

The Intangible Capital Value (ICV) complies with the International Private Equity and Venture Capital Valuation (IPEV) guidelines by applying rigorous methods and regular updates for the valuation of intangible assets. Here’s how:

 

  1. Use of Multiple Valuation Methods: IPEV guidelines recommend using multiple valuation methods to corroborate values, considering qualitative factors and adjustments for different classes of shares. ICV applies this approach using Discounted Cash Flow (DCF), market comparables, and cost methods, ensuring accurate and robust estimates.
  2. Incorporation of Known and Knowable Information: IPEV guidelines emphasize incorporating all known or reasonably knowable information at the measurement date. ICV ensures all relevant information, including macroeconomic and investment-specific uncertainties, are integrated into valuations to accurately reflect market conditions.
  3. Integration of ESG Factors: The 2022 IPEV Guidelines include integrating Environmental, Social, and Governance (ESG) factors into valuations. ICV incorporates these factors by assessing their impact on forecasted cash flows and risk profiles, ensuring comparability with similar companies and providing comprehensive evaluations.
  4. Enterprise Value Adjustments: IPEV guidelines require adjusting enterprise value to reflect excess assets or liabilities. This includes identifying stable working capital, excess assets, and adjusting liabilities such as deferred payments, incentive compensation, bonuses, pensions, taxes, etc.
  5. Principles-Based Approach: IPEV guidelines advocate a principles-based approach rather than a prescriptive one, focusing on what is “known and knowable” at the measurement date. ICV adheres to this approach by adapting its evaluation methods to the specific circumstances of each intangible asset, ensuring fair and accurate assessments.

Importance of Dynamic Valuation for Innovative Startups and SMEs

Dynamic valuation is crucial for startups and innovative SMEs for several essential reasons:

  1. Adaptation to Rapid Market Changes: Startups often operate in dynamic environments. Dynamic valuation allows for quickly reflecting changes in market conditions, technology, and regulations, maintaining accurate and relevant assessments of intangible assets like intellectual property, brands, and technological know-how.
  2. Risk and Uncertainty Management: Regular updates, quarterly or even monthly, allow for quickly identifying emerging risks and responding accordingly. This includes integrating new relevant information and assessing the impact of ESG factors on the value of companies.
  3. Investor Transparency and Confidence: Investors require accurate and up-to-date information to make informed decisions. Dynamic valuation in compliance with IPEV guidelines enhances investor confidence and facilitates access to financing.
  4. Strategic Decision Making: Frequent and accurate evaluations provide crucial insights for strategic decision-making. This helps better plan investments, potential acquisitions, and growth initiatives while ensuring the company remains competitive in the market.
  5. Continuous Performance Evaluation: Real-time or near-real-time updates allow for continuous tracking of the company’s performance. This helps identify areas needing improvement and capitalize on strengths, ensuring optimal resource management.

Conclusion

Dynamic valuation of intangible assets with frequent and real-time updates is essential for the success of innovative startups and SMEs. By aligning these practices with IPEV guidelines, companies can ensure accurate and industry-best-practice compliant evaluations. For more details, consult the full IPEV guidelines on their official site (Private Equity Valuation).

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