Intellectual capital in valuing intangible assets

Knowledge companies who generate their revenue from leveraging the talents and contacts of professionals are confronted with two dilemmas ‐ acquiring institutional funding without hard collateral and managing these revenue‐generating talents. These companies appear to have understated balance sheets. Their value, however, can be highly appreciated as is illustrated by the stock prices. This presents a problem when acquiring institutional funding since hard collateral is scarce. Another dilemma is how to manage these revenue‐generating talents and systems. It appears that both external and internal sources have a need to measure, manage and grow these assets. This paper presents methods currently in use to identify and measure intangible assets and also experiments by applying five of these measurements to a single company over a period of eleven years. The purpose of this exercise is to note any similarities with financial measures and to determine the predictability of performance based on these indicators.