The identification process is the initial step in establishing the valuation conditions, the standard of value, and the valuation methods. Through this process, we obtain a detailed description of intangible assets, including characteristics such as:
- Transferability (e.g., a certificate that cannot be transferred through a purchase or sale transaction). It can only be “transferred” as part of a business entity, and only then will it have intrinsic value. Similarly, know-how cannot always be transferred when the owner lacks specific solutions that enable others to acquire it.
- Uniqueness (for example, the absence of comparable intangible assets or fields of exploitation). Considering the principles of comparative analysis, the technique is limited in valuation. As a result, it affects the reliability of market-based valuation methods.
- Useful life (e.g., a period limited in the case of a patent by the expiry date of protection). It could also be limited by the pace of technological progress. Simultaneously, it is unlimited for valuable company brand names.
- Flexibility (e.g., a license agreement may allow adapting to changing circumstances through real options, which are rights that can be exercised by altering the method, scope, fees, and other key parameters of the goods’ use). intangible assets),
- Complexity (e.g., difficulty in distinguishing the stream of future benefits produced by specific components of the intangible assets portfolio, especially when these components generate numerous synergistic effects),
- Fields of exploitation (e.g., current or potential market niches, restrictions on use – territorial, subjective, quantitative, etc.),
- Legal situation (e.g., current or potential third-party claims, and the method and scope of legal and organisational protections). Especially important for technical and managerial know-how solutions.
Errors in identifying intangible assets lead to the selection of incorrect methods and render the valuation result completely inapplicable.
