IACVS Malaysia Charter - The Business Valuation Association of Malaysia (BVAM) hosted the conference on valuation of Intangible Assets at the Hilton Petaling Jaya on October 15, 2019. This conference was supported by the Valuation and Property Services of Malaysia (JPPH). Mr. William Hanlin, CEO & President of IACVS, attended the conference and delivered a speech.
Mr. Hanlin pointed out the shifting and accelerating trend of businesses and companies being driven and valued for their intangible capital such as intellectual property and other intangible assets have not slowed down. In fact, numerous market studies have shown that businesses are increasingly more savvy about these invisible assets in the knowledge economy where intangible rules. This conference was timely to address the various opportunities and challenges proffered by this shifting tide, to c-suite executives, entrepreneurs and service providers on the current best practices of valuing business and its intangibles, challenges and new insights with the rise of increased sophistication of companies in monetizing their IP rights. Tangible assets such as cash, stocks, machineries or office buildings are no longer the main criteria for assessing market value, but intangible assets such as intellectual property occupy a central position. A key reason for ensuring the valuation of intangible assets is that in the event of intellectual property infringement and disputes, economic losses can be valued to facilitate claims.
Mr. Elvin Fernandez pointed out: “With more appraisers who can conduct professional and accurate assessments of intangible assets, we hope to stimulate the growth of intangible assets as recognized assets in domestic financial markets.” He added: “The valuation is a general profession, and the basic concept of valuation cannot be changed. The concept of valuation is used as a defined accounting term that applies to any tangible or intangible asset.” He made a comparison between real estate valuation and business valuation. According to him, the board of valuers, appraisers, real estate agents and property managers committee are revising and upgrading the Malaysian Valuation Standards and this will include a separate section referred to as Guidelines on Business Valuation which will include an intangible asset valuation.
Ms. Christine Ng explained that the government recognized IA and IP as critical elements in the growth of SMEs as early as 2010. She said that over the years, there are in place various types of funds by government-based agencies to enable companies to monetize their IP. Apart from obtaining loans, intangibles play a crucial role when a smaller tech-based company or SME has an acquisition or joint venture opportunity on the cards. Therefore, when valuing such a merger, valuation of the intangibles plays a crucial role in ensuring that the SME gets a fair value for its IP. She pointed out that IPs are a large part of a company's value in more developed economies. If a SME is rendered bankrupt, its registered IP, be it a trademark, brand or patent, can be carved out and sold to an interested buyer, usually a competitor. She cited the example of Kodak. In 2012 Eastman Kodak sold its digital imaging patents to a consortium of bidders, which included Google and Apple, for US$525 mil after filing for Chapter 11 protection earlier that year.
Mr. Ang Kok Heng revealed that many SMEs have not approached the banks to apply for loans as many of them have yet to register their IPs. While lauding the government's move to recognize the importance of IPs and its role in improving SME liquidity, Ang believed initiatives still need to be focused on providing education, awareness and financing to register an IP. Ang called on government bodies and relevant agencies to conduct roadshows and talks on the importance of registering IPs. He also hopes there will be more funding opportunities, with grants being made more easily available for SMEs to register their IPS.
At present, the lack of registered IPs means the SMEs operators are not able to obtain funding using their IP as collateral. Similarly, in the event of infringements, when an IP is not registered, the SME is not able to take the culprit to court as the IP is not registered and therefore not subject to legal backing.A registered IP has inherent rights and laws that govern it. Said by FocusM V. Sanjugtha
Participants said that by participating in this conference, they have gained a deeper understanding of intellectual property and intangible assets valuation. They hope that BVAM and IACVS Headquarters will be able to hold more lectures and conferences to facilitate communication and learning in future.
The growing importance of intangible assets in the 21st century and the proliferation of financial fraud on a global scale are increasingly being valued. IACVS's mission is to disseminate professional theories and standards in the field of business valuation and anti-fraud, providing professionals with the best practical mode of operation. In the field of business valuation, IACVS promotes the normative application of assessment principles, methods and models around the world. In the field of anti-fraud and court litigation support, IACVS develops and disseminates operating systems and technologies for reconnaissance and anti-fraud. For more information please contact info1@iacvs.org.
The International Association of Certified Valuation Specialists