Intangible property refers to non-physical assets that provide future benefits to their owner such as copyrights, patents, trademarks, business processes, brands and relationships.
Key Features:
- Include intellectual property like designs, software code and content
- Also encompass goodwill, trade secrets, franchising contracts and licenses
- Derive value from being proprietary and generating revenue unlike physical properties
- Require legal protection through registration or confidentiality agreements
- Are long-term investments that can appreciate company valuation significantly
Example:
A marketing firm’s client database and specialized analytical models formed the bulk of its worth as intangible assets during acquisition.
Key Takeaways:
Intangible assets are important drivers of competitive advantage but must be strategically nurtured, accounted for and safeguarded to maximize their economic benefits over the long-term.