During a merger, determining the fair value of intangible assets—intellectual property, customer relationships, employee non-compete agreements, trademarks, and the like—is never easy.
Determining those values when you have no observable data to guide your thinking makes the task well near impossible. Still, when a merger has to close, you gotta take your best guess.
Apparently the acquirers of Corporate America pegged the value of those most intangible of assets at $20.5 billion over the last several years.
Calcbench drew that conclusion by poking around or Segments, Breakouts, and Rollforwards database. One of the breakout categories available for search is Business Merger—Intangible Assets Acquired. So we decided to research how many companies reported intangible assets acquired during a merger, 2012 through 2015. We specifically looked for so-called “Level 3 assets,” whose value must be determined by models because no market data exists to suggest a more accurate price.
The research itself took only a few moments. We searched the entire universe of corporate filers, and found 26 filers that reported 134 disclosures during that four year period. Total value of those Level 3 assets was $20.551 billion.
We next did some number crunching, to find the total of Level 3 intangibles reported by each of those filers, and then to sort those totals by size. The 10 filers who reported the largest totals of Level 3 intangible assets acquired during a merger, 2012 to 2015, are as follows:
That list isn’t terribly surprising; all those companies have been fairly acquisitive in the last few years, in our world of low interest rates and sluggish organic growth. Most of the acquired assets are described as trademarks for acquired businesses. Others are listed as licenses, in-process research & development, or even the value of employee non-compete agreements.
What can someone do with this information? Well, over time an analyst might be able to determine whether the value management placed on these assets was accurate. Maybe an employee non-compete agreement gets invalidated in court, maybe your R&D is based on bad science, maybe an acquired company becomes wildly popular and the value of its trademark soars.
Honestly, we here at Calcbench don’t know all the ways you can put data like this to work—but we do have the data. With a few keystrokes and ingenuity, analysts can put it to work in all sorts of ways.
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