The Handbook of Business Valuation and Intellectual Property Analysis

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The Handbook of Business Valuation and Intellectual Property Analysis Edited by Robert F. Reilly and Robert P. Schweihs McGraw-Hill, 2004; ISBN: 0071429670; 600 pages; $99.95 (hardcover)

The Handbook of Business Valuation and Intellectual Property Analysis features the contributions of 29 experts from leading valuation, accounting, investment, and law firms, and provides a comprehensive review of contemporary valuation issues related to business, securities, and intellectual property. Several chapters are updates of a previous anthology compiled by the same editors, The Handbook of Advanced Business Valuation.

This new work's main contribution is its recognition of the importance of intangible assets in the information age. It addresses the enormous complexities associated with measuring the value of these assets in a practical context. This work is truly for the experienced professional; however, the novice can derive insight into this area as well.

There has been an explosion of intangible assets, which now make up the majority of many companies' asset base. One indicator of the value of intangible assets today is the relationship between book value and trading prices for public company securities. Prior to 1980, book value tracked security prices. Today, security prices are, to a large degree, very much in excess of book value. The reason is that accounting rules do not permit the recording of intangible asset values unless they have been purchased. The marketplace, however, recognizes the value of intangible assets, and this is reflected in security prices.

More than half the book is devoted to valuation topics other than intangible assets. The book is divided into six parts. Part I explores traditional valuation issues, including discussions of the elusive equity risk premium, minority interest and marketability discounts, built-in gains taxes, and S corporation valuations. Part II provides valuation methodologies for certain specialized industries, such as health care. Fairness opinions and the now-popular family limited liability companies are also discussed. Part III has an excellent chapter on identifying value drivers as an important means of arriving at more "correct" valuation conclusions. The exercise of identifying value drivers and quantifying their impact on company value contributes enormously to achieving credibility in one's reports. The practical application to real-life valuation assignments, backed by theoretical underpinnings, is the hallmark of these chapters, as well as of the entire book. …