I thought it would be interesting to dig a bit deeper into the extent of the increase in the proportion of aggregate market value attributable to tangible assets over the past 12 months. In particular, I was intrigued to analyze the differing valuation dynamics for financial vs. non-financial firms.
The topline answer is, not surprisingly, that the valuation of financial services companies has seen the greatest change. Two years ago, tangible book value represented 36% of the market value of financial companies. In June last year, this number was 47%. In June this year, it was 57%.
For non-financial firms, the increase in the proportion of market value represented by tangible assets was significant – but much less dramatic. Tangible book value has risen from 19% of their market value in June 2007 to 22% last year, to 27% this year.
My point is that – whichever way you want to slice the data – intangible value represents the majority of market value in all but a few sectors. The ambition of this blog (indeed, of Type 2 Consulting more generally) is to support companies as they seek to maximize the contribution of intangible assets to overall business performance.
