Those So-Called Intangible Assets Matter More than Ever. Here’s Why.
Apr 23, 2021
We have all heard that measuring what matters is how successful businesses are run. As for what are often called “intangible assets,” that has long been a different conversation.
Research points to the inescapable conclusion that we are emphasizing measurement on what
used to matter, whereas the focus and robust attention needs to shift to what matters in today’s world – environmental, social and governance (ESG) actions and impacts.
More than a decade ago, a shareholder activist and corporate governance adviser, Robert A. G. Monks, joined with Alexandria Reed Lajoux, founding principal of Capital Expert Services, LLC (CapEx), to quantify what went into defining what goes into corporate valuations. They determined that between 70 and 90 percent of the value of publicly traded companies in the U.S. was attributable not to the physical and financial assets, but was embedded in what many have described as intangible assets, which can include intellectual property, customer loyalty, employee engagement and productivity, labor relations, community goodwill, brand reputation and analysts’ perceptions.