As a practising accountant, your take on intangibles reflects my view on the current accounting standards. Thanks for making this topic of intangibles clear and easy to understand
Thanks for the great video. I enjoyed your methodology of valuing the brand name & management performance. One small pushback - I believe the "Barbie Buzz Effect" is overweighted. As you mentioned, fades pass quickly, and intuitively, it doesn't make sense to attribute over $800 M to Barbie alone. Thanks again for the great content.
I am a valuation analyst, and I am currently working on an IFRS PPA project trying to reconcile Equity book value and deal value by re-estimating the book value of intangibles. It's quite an insightful yet short video notably when you need to get ingenious as to which economic assumptions to leverage to value accurately these assets.
Sir you have explained the intangible assets spilts so much well in this video that no one can beat your simple and honest method.. Each video is adding value to my understanding of valuations of any company . Thanks 👍🏻👍🏻
Once again a fantastic presentation & valuation logic. Would love to have a list of at least 10 companies where you would be a buyer! Thank you very much for this detailed presentation & throwing light on intangibles in a company. Already looking forward to your next presentation. You add tremendous value to my understanding of a company. A major & sincere salute to you.
The only aspect I would debate is the weightage given to Barbie movie effect. In this economy, most adults and older people might be too stressed to follow the hype around a movie, it would mostly be teenagers and young adults who are mostly shielded from the difficulties and tensions of the current socio economic scene. Since you mentioned Birkenstock has more of its customers in the adult age a group, I can see a scenario where the barbie hype pays out lesser than expected.
Wow! As a CPA I am dazzled by your insight into showing connections to government as a revenue item , putting it on the income statement as opposed to the balance sheet. Bribe income; bribe expense. And of course we could break down bribes into type of bribe expense - cash, jet airplane flights, hookers - and legal versus illegal bribes. Then you would calculate the profit value of the expected contracts. Such an advanced valuation technique, and way beyond the scope of most CPA training books and classes. Elon Musk new board member revenue - clarence thomas right leaning votes revenue - I guess all this crap is what makes the world go round. Thanks for the insight professor.
At 12:00, what about cases where a company acquires a brand/trademark. That expense does not go on the income statement, cash from balance sheet is reduced and an intangible asset needs to be added without any adjustment to the liability side. If buying a brand requires creating an intangible asset in the balance sheet(unless you want to significantly reduce the book value), next question automatically becomes why should the brands developed by the company not show up on the balance sheet.
Many of the economic values of intangibles or non capital assets are easier to understand because they fall in the labor and technological category. From the perspective of macroeconomics those are standard input to production function. Other intangibles assets like ESGs related are harder to wrap my head around.
On ESG not showing up anywhere in valuations: good luck raising institutional debt or equity to build a coal plant anywhere in the world, even in markets where coal-fired generation is the by far the most economic form of electricity generation. You have to dig vey deep into the non-traditional sources of debt and equity, which definitely shows up as an increase in cost of capital.
Insightful video - fully agree with your take on goodwill being a plug value. But if you take the example of a property acquisition, if there’s an asset deal of a $10m house, this would show up within PPE at $10m post acquisition. But if you do a share deal of a property company (PropCo) which owns the same house, where this PropCo acquired the house for $8m ten years ago, then this share deal would show up on your balance sheet as $2m goodwill and $8m share participation. How is the plug value bad then when you’re essentially buying the same look-through FMV price for the house? For simplicity let’s assume no latent capital gains taxes in the PropCo, and no net debt.
thanks for amazing content as always. I check your worksheet and i have a question. The current company sale to capital is 0.37 while industry median is 1.28, the 3rd quartile is 1.96. Why do you assign it to be 2.62? It's too high for celebrities effect no? I do expect this already happened in the past. If changed, this will bring value/share to 37.29. What is your thought?
But companies ganing momentum with intagibles as an aspect of valuation prospect for itself to call a growth or hot stock is 50/50 way of telling, this trend is alarming as it would create bubbles in sectors which measure its company growth on only expectation of its multiple growth assets which may or may not be a cash flow generator for the companies. The cycle of trillion dollar and hundreds of billion dollar market cap companies will keep changing much faster than companies which are actually worth or produce profits in some range. Very alarming trend sir, please do comment on this.
Hi where and how can you find the IPOs and companies like that? Thanks? Why in Germany (Europe) they have so great companies like Emma matrarzen,this one's, their car industry, software industry
Hi. My PhD title " Finacial Reports - a mirror of Etics, with reference to Intangible Asset". I am working to bring intangibles to Balance Sheet. Did work on Brand and working on Founder Value as alpha factor, and on Financial report suggestions for start ups. My concern is if intangibles are not brought to Balance sheet, the financial reports would become redundant, and we may face times of low capital formation.
Only one disagreement with you on this professor, instead of taking an average of big brand name companies for operating margins to show the difference due to good management , should we not take the margins which the company itself had before bringing in the management changes ?
The balance sheet has debt, share counts, and other important info. It's just that you can't trust most of the dollar values there as being accurate. Usually you have to go into the footnotes and figure out more reasonable values for yourself.
@@Ultrarooster33 I guess you should only ignore intangible assets then like Goodwill and trademarks, patents etc. Those are 100% reflected within the CF
Whatever the goodwill they have, they are all already reflected in the revenue and cash they generated, aren't they? At $160 million net profit (assume 100% free cash flow conversion), you are getting what, like 1.6% cash yield (assume EV is about 10 billion)? Is it a good investment? I am surprised you did not talk about pricing power; if they have strong "goodwill", can they increase the price without reducing demand?
Aswath is intangible. Thank you for the insight.
And you cant expense him
You can definitely touch it though.
As a practising accountant, your take on intangibles reflects my view on the current accounting standards. Thanks for making this topic of intangibles clear and easy to understand
Thanks for the great video. I enjoyed your methodology of valuing the brand name & management performance. One small pushback - I believe the "Barbie Buzz Effect" is overweighted. As you mentioned, fades pass quickly, and intuitively, it doesn't make sense to attribute over $800 M to Barbie alone. Thanks again for the great content.
I am a valuation analyst, and I am currently working on an IFRS PPA project trying to reconcile Equity book value and deal value by re-estimating the book value of intangibles. It's quite an insightful yet short video notably when you need to get ingenious as to which economic assumptions to leverage to value accurately these assets.
Sir you have explained the intangible assets spilts so much well in this video that no one can beat your simple and honest method.. Each video is adding value to my understanding of valuations of any company .
Thanks 👍🏻👍🏻
It's always a great content from Prof Aswath. I even followed his page on FB…
Thank you Sir, your kindness is much appreciated!
It's always a great content from Prof Aswath. I even followed his page on Facebook… easier to connect with him
Once again a fantastic presentation & valuation logic. Would love to have a list of at least 10 companies where you would be a buyer! Thank you very much for this detailed presentation & throwing light on intangibles in a company. Already looking forward to your next presentation. You add tremendous value to my understanding of a company. A major & sincere salute to you.
Thank you Professor. I'm digging deeper into competitive advantages, and I found it very helpful.
It's always a great content from Prof Aswath. I even followed his page on Facebook…
Hope you never stop doing these
It's always a great content from Prof. I even followed his page on Facebook.., easier to reach
Love your videos Professor!!
Dear Aswath, your videos and the insights shared are invaluable...
Dear Profesor,
You is great and good person.
Thx for share.
Thank you so much for this. Learned a lot from this video. Greetings from Croatia
The only aspect I would debate is the weightage given to Barbie movie effect. In this economy, most adults and older people might be too stressed to follow the hype around a movie, it would mostly be teenagers and young adults who are mostly shielded from the difficulties and tensions of the current socio economic scene. Since you mentioned Birkenstock has more of its customers in the adult age a group, I can see a scenario where the barbie hype pays out lesser than expected.
Wow! As a CPA I am dazzled by your insight into showing connections to government as a revenue item , putting it on the income statement as opposed to the balance sheet. Bribe income; bribe expense. And of course we could break down bribes into type of bribe expense - cash, jet airplane flights, hookers - and legal versus illegal bribes. Then you would calculate the profit value of the expected contracts. Such an advanced valuation technique, and way beyond the scope of most CPA training books and classes. Elon Musk new board member revenue - clarence thomas right leaning votes revenue - I guess all this crap is what makes the world go round. Thanks for the insight professor.
At 12:00, what about cases where a company acquires a brand/trademark. That expense does not go on the income statement, cash from balance sheet is reduced and an intangible asset needs to be added without any adjustment to the liability side. If buying a brand requires creating an intangible asset in the balance sheet(unless you want to significantly reduce the book value), next question automatically becomes why should the brands developed by the company not show up on the balance sheet.
Would love for you to do aa follow-up on Crocs vs this. Very surprised you didnt mention crocs as a comp and went with other luxury cos.
Great video. Thanks for information on intangible assets.
Waiting for every your video. It is a master piece.
wonderful video and very useful for practical assignments
Many of the economic values of intangibles or non capital assets are easier to understand because they fall in the labor and technological category. From the perspective of macroeconomics those are standard input to production function. Other intangibles assets like ESGs related are harder to wrap my head around.
I learn a lot from you Professor . Thank you!
Thank you for another great lecture!!!
It's always a great content from Prof Aswath. I even followed his page on Facebook…
On ESG not showing up anywhere in valuations: good luck raising institutional debt or equity to build a coal plant anywhere in the world, even in markets where coal-fired generation is the by far the most economic form of electricity generation. You have to dig vey deep into the non-traditional sources of debt and equity, which definitely shows up as an increase in cost of capital.
Insightful video - fully agree with your take on goodwill being a plug value. But if you take the example of a property acquisition, if there’s an asset deal of a $10m house, this would show up within PPE at $10m post acquisition. But if you do a share deal of a property company (PropCo) which owns the same house, where this PropCo acquired the house for $8m ten years ago, then this share deal would show up on your balance sheet as $2m goodwill and $8m share participation. How is the plug value bad then when you’re essentially buying the same look-through FMV price for the house?
For simplicity let’s assume no latent capital gains taxes in the PropCo, and no net debt.
@awathdamodaranonvaluation
thanks for amazing content as always.
I check your worksheet and i have a question. The current company sale to capital is 0.37 while industry median is 1.28, the 3rd quartile is 1.96. Why do you assign it to be 2.62? It's too high for celebrities effect no? I do expect this already happened in the past. If changed, this will bring value/share to 37.29. What is your thought?
But companies ganing momentum with intagibles as an aspect of valuation prospect for itself to call a growth or hot stock is 50/50 way of telling, this trend is alarming as it would create bubbles in sectors which measure its company growth on only expectation of its multiple growth assets which may or may not be a cash flow generator for the companies. The cycle of trillion dollar and hundreds of billion dollar market cap companies will keep changing much faster than companies which are actually worth or produce profits in some range. Very alarming trend sir, please do comment on this.
Hi where and how can you find the IPOs and companies like that? Thanks? Why in Germany (Europe) they have so great companies like Emma matrarzen,this one's, their car industry, software industry
Great video, thank you very much.
15:00 didn't realize goodwill was so nefarious
Hi. My PhD title " Finacial Reports - a mirror of Etics, with reference to Intangible Asset". I am working to bring intangibles to Balance Sheet. Did work on Brand and working on Founder Value as alpha factor, and on Financial report suggestions for start ups. My concern is if intangibles are not brought to Balance sheet, the financial reports would become redundant, and we may face times of low capital formation.
Can we collaborate!
Thank you !
Why do you put the brand name in the operational profit instead of the revenues or the gross profit?
Only one disagreement with you on this professor, instead of taking an average of big brand name companies for operating margins to show the difference due to good management , should we not take the margins which the company itself had before bringing in the management changes ?
So basically you can just ignore the balance sheet and work with the CF and earnings statements right?
The balance sheet has debt, share counts, and other important info. It's just that you can't trust most of the dollar values there as being accurate. Usually you have to go into the footnotes and figure out more reasonable values for yourself.
@@Ultrarooster33 I guess you should only ignore intangible assets then like Goodwill and trademarks, patents etc. Those are 100% reflected within the CF
Whatever the goodwill they have, they are all already reflected in the revenue and cash they generated, aren't they? At $160 million net profit (assume 100% free cash flow conversion), you are getting what, like 1.6% cash yield (assume EV is about 10 billion)? Is it a good investment? I am surprised you did not talk about pricing power; if they have strong "goodwill", can they increase the price without reducing demand?
I would be interested to know how much of the 20% income less than 50k/year are made up retirees.
Rockstar .
ESG stand for “Evil Sounds Good” lol
I'll read the book. Can't take his delivery.
Great Thank you
It's always a great content from Prof Aswath. I even followed his page on FB…
ah ah ah yep! yep! great intangibles...
❤
It's always a great content from Prof Aswath. I even followed his page on Facebook…
Hoy have it at 36€. Would you buy it?😅
can't wait tilTaylor Swift is seen in them!!
Amer sports next!
Lord
PE 43 - no thanks
Hindi mein bolo na sir