Exploding the Intangible Asset Market Cap myth
Last week, Pat Sullivan posted a great comment on the (ongoing) myth clung to by many in the Intellectual Asset and Intellectual Property fields – that you can calculate the value of a publicly traded firm’s intangible assets by simply subtracting the value of the tangible assets from the current market capitalisation.
This is the line of thinking that generated the often quoted figure that 70% or more of a companies assets are intangibles.
I’ve always qualified that by saying here ‘intangibles’ must include a fudge factor for market perception – which overules everything in the publicly traded stocks.
As Pat points out, the current economic crisis and the large market cap losses on stock markets underscore the proposition that the difference in value is not simply attributable to intangible assets.