From Dr Nir Kossovsky.
Sir, We fully agree with Jennifer Hughes ("Little value in making goodwill even more intangible", May 8): investors are hungry for information; the value of most firms resides in their intangibles; acquirers do not look at businesses as a bucket of assets and liabilities; and reputation is another really hard-to-quantify intangible asset.
We augment. The value of intangible assets is the difference between a company's book value and market capitalisation; that value averages approximately 70 per cent of a company's market capitalisation on the US exchanges. Intangible assets comprise business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security and resilience. Today, these intangibles drive cash flow and are the primary sources of risk. Intangible asset information, management, risk forecasting and transfer are growing services as the economic base divests itself of physical assets. An increasing number of analysts and fund managers now rely on "extra-financial information".
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