In case anyone has missed investment trends in the U.S. over the past 5-6 years, Kevin Hasset, Director of Economic Policy Studies at the American Enterprise Institute (AEI), and Robert Shapiro, Chairman of Sonecon, LLC, have published a study that reveals in considerable detail the growth in the value of intangible assets:
In 2005 they estimated the “total value of U.S. intellectual capital at $5.0 trillion to $5.5.”
The study reports that in 2011:
• The value of the intellectual capital in the U.S. economy has increased to between $8.1 trillion and $9.2 trillion; and
• The value of the intangible assets – which includes intellectual capital plus economic competencies (“firm-specific and task-specific knowledge and practices of managers and workers”) – in the U.S. economy reached an estimated $14.5 trillion in 2011.
Most mark-to-market studies of the U.S. stock market back into a figure of 80% of companies’ total assets are now intangible. The Hasset-Shapiro study yields an intangible-assets-to-market value ratio of 79.2%. BVR’s study of nearly 400 Purchase Price Allocations filed with the SEC revealed that 72% of the total assets identified, reported and accounted for are intangible.
Today analysts need to have a firm grasp of valuation principles as they apply to intangible assets; BVR’s Guide to Intellectual Property Valuation by Mike Pellegrino has become a must-have tool.