Dealing with Intangibles: Valuing Brand Names, Flexibility and Patents

Abstract:     
A standard critique of valuation models, in general, and discounted cash flow models in particular is that they fail to fully account for the many intangible assets possessed by firms. There have been attempts to value brand name, trade marks and copyrights and bring them on to the balance sheet. Other intangible assets include patents and customer lists. We would expand this list to consider the flexibility that a firm may preserve to expand its market or enter new markets. In this paper, we consider a variety of ways in which these assets can be valued and the consequences for investors.

Number of Pages in PDF File: 73

Keywords: intangibles, brand name, patents, real options

JEL Classification: G10, G30, M10

working papers series