The International Valuation Standards Council (IVSC) has today published an updated Guidance Note on the valuation of intangible assets. The revised GN 4 identifies the principal techniques that are recognised for the valuation of intangible assets such as brands, intellectual property and customer relationships, and gives guidance on how these are applied.
Intangible assets have been valued by companies or their advisors for many years, but the adoption around the world of International Financial Reporting Standards (IFRS) has greatly increased the need for consistency and transparency. Following a merger or acquisition IFRS requires the price paid to be allocated to the tangible and intangible assets based on fair values. However, studies of the audited accounts of listed companies have found that the quality of information provided on the value of intangible assets is often poor. IVSC recognised that there was a need to produce more comprehensive and authoritative guidance on valuing intangibles, for the benefit of not only companies and their advisors but also investors and others who rely upon financial statements. The revised guidance is the result of a project commenced in 2006 which has involved extensive consultation with valuation professionals, auditors and users of valuations around the globe.
Chris Thorne, chairman of the International Valuation Standards Board, comments:
“The valuation of intangible assets such as brands, goodwill and intellectual property is becoming increasingly important in the context of cross-border mergers and acquisitions, joint venture arrangements and for investment and lending decisions. However, there is too frequently a disconnect between the book value of companies and the real market value of their intangible assets. The revised guidance has therefore been published to assist practitioners valuing intangible assets, and to help demystify the whole process so that it becomes more comprehensible to investors around the world.”
The IVSC is also collaborating with the Appraisal Foundation in the USA on the development of best practice guidance on specific areas where there is currently an absence of recognised authoritative guidance, including the valuation of customer relationships and the identification and valuation of control premiums.
— Get Guidance Note 4 (pdf) on the IVSC website: www.ivsc.org (note: GN4 superseded byTIP 3 in March 2012)
For press enquiries please contact:
For further information on the IVSC please contact: Marianne Tissier, IVSC
Tel: +44 (0)1442 879 306
Rohit Grover/Natalie Dyer, Spada
Tel: +44 (0)20 7269 1430
NOTES TO EDITORS
About the IVSC
The International Valuation Standards Council (IVSC) is charged with developing robust and transparent procedures for performing international valuations through a single set of globally recognized valuation standards, acceptable to the world’s capital markets organisations and regulators, and meeting the challenges of a fast-changing global economy. The governance structure of the IVSC, a non-profit organisation incorporated in the US, now includes two independent technical Boards – the International Valuation Standards Board and the International Valuation Professional Board – with oversight by a globally representative Board of Trustees responsible for the strategic direction and funding The IVSC works co-operatively with national professional valuation institutes, users and preparers of valuations, governments, regulators and academic bodies, all of whom can become members of the IVSC and have an important role to play in advising the Boards on agenda decisions and priorities in the work of the IVSC.
For more information please visit: www.ivsc.org