The Valuation of Digital Intangibles: Technology, Marketing, and the Metaverse

Contents
List of Figures
List of Tables
1 Introduction
Part I A General Valuation Approach
2 The Valuation of Intangible Assets: An Introduction
2.1 Purpose of the Firm Evaluation
2.2 Digital Business Modeling and Planning as a Prerequisite for Valuation
2.3 The Balance Sheet-Based Approach
2.4 The Income Approach
2.4.1 Estimated Normalized Income
2.4.2 Choice of the Capitalization Rate
2.4.3 Choice of the Capitalization Formula
2.5 The Mixed Capital-Income Approach
2.6 Cash Is King: The Superiority of the Financial Approach
2.6.1 The Capital Asset Pricing Model and the Dividend Discount Model
2.7 Empirical Approaches
2.7.1 The Economic Value Added (EVA®)
2.8 Potential Tax Liabilities
2.9 Majority Premiums and Minority Discounts
2.10 The Control Approach
2.11 The Accounting Value of Intangible Assets
2.11.1 Intangible Assets and Capitalized Costs
2.11.2 Valuation Drivers, Overcoming the Accounting Puzzle
2.12 Intangible Assets Valuation According to IVS 210
2.12.1 Cost Approach
2.12.2 Income/financial Approach
2.12.3 Market Approach
2.13 Intangibles with a Defined and Indefinite Useful Life
2.14 Surplus Intangible Assets
2.15 Hard-to-Value Intangibles
2.16 Resource-Based View and Balanced Scorecard: Introductory Remarks
2.17 The Intangible Roadmap: From Patents and Trademarks to Blockchains, Big Data, and Artificial Intelligence
2.18 Intangible-Driven EBITDA
Appendix 1: Interaction Between WACC and Other Key Financial Ratios
Notes
Selected References
3 Digital Scalability and Growth Options
3.1 Introduction
3.2 Vertical and Horizontal Scalability
3.3 Digital Scalability
3.4 Scalability as a Real Option
3.5 The Impact of Scalable Intangibles on Capex and Opex
3.6 The Accounting Background: Operating Leverage
3.7 Break-Even Analysis
3.8 The Impact of Scalability on the Enterprise Valuation
3.9 Corporate Profitability and Scalability
3.10 Metcalfe’s Law
3.11 Moore’s Law and Other Scalability Patterns
3.12 Exponential Growth
3.13 Geolocalization and Traceability
3.14 From Digital Scalability to Blitzscaling
3.15 E-commerce and Scalable Internet Trading
3.16 Scalable and Digital Supply Chains
3.17 Digital Transformation
3.18 Networking Digital Platforms
3.19 Sustainable Business Planning
3.20 Digitalization Beyond the Pandemics
3.21 APPENDIX—Examples of Operating Leverage Changes
Notes
Selected References
Part II Technology
4 The Valuation of Know-How
4.1 The Uncertain Perimeter of “Know-How”, Between Organization and Technology
4.2 Galilean Replicability and Industrialization of the Experimental Scientific Method
4.3 Protection, Sharing, and Transfer of Know-How
4.4 Economic and Financial Valuation
4.4.1 The Relief-from-Royalty Approach
4.4.2 The Incremental Income Approach
4.4.3 The Estimate of the Cost Incurred (or of Reproduction)
4.4.4 The Complex Balance Sheet-Based Approach
4.4.5 The Mixed Capital-Income Approach, with an Independent Estimate of Goodwill
4.5 Product and Process Innovation
4.6 Know-How and Creditworthiness
4.7 The Impact of Artificial Intelligence and Digitalization on Know-How
Note
Selected References
5 Patent Valuation
5.1 Patents: Definition and Rationale
5.2 From Know-How to Patents
5.3 Accounting as a Prerequisite for Valuation
5.4 License or Sale?
5.5 A Comprehensive Valuation Approach
5.6 Cost-Based Approaches
5.7 Market Valuations and Net Present Value
5.8 Comparability Factors
5.9 Income Approach
5.10 Real Options
5.11 Quick and Dirty Valuation Techniques
5.12 Forecasting Patent Outcomes with Big Data and Stochastic Estimates
5.13 Medtech and Biotech Companies and the Technology Transfer Cycle
5.14 The Impact of Digitalization on Patents
Notes
Selected References
6 The Valuation of Digital Startups and Fintechs
6.1 Risk Capital for Growth: The Role of Venture Capital, Private Equity, and Business Angels
6.2 Types of Investments, Intermediaries, and Bankability
6.2.1 Startup Loans and Venture Capital Activities
6.2.2 Financing for Expansion and Development: The Role of Private Equity and Bridge Financing
6.2.3 Financing of Change and Modification of Ownership Structures: Replacement Capital, Buyout, Venture Purchase, and Turnaround Financing
6.2.4 Scaleup Valuation
6.3 The Investment Process
6.4 The IPEV Valuation Guidelines
6.4.1 An Estimate of the Fair Value in Investee Companies
6.4.2 An Estimate of the Fair Value of Investments in Portfolio Companies
6.5 Startup Evaluation with Binomial Trees
6.6 The Venture Capital Method
6.7 Break-Up Value of Venture-Backed Companies
6.8 Stock Exchange Listing and Other Exit Procedures
6.9 Valuation of the Investment Portfolio with a Net Asset Value
6.10 Fintech Valuation
6.10.1 Business Models
6.10.2 Valuation Metrics
6.11 Unicorns
6.12 Key Person Discounts
Notes
Selected References
7 The Valuation of Software and Database
7.1 Definition and Main Features
7.2 Accounting and Fiscal Aspects
7.3 Legal Protection of Software: Introductory Remarks
7.4 Economic and Financial Valuation
7.4.1 Software House Revenue Model
7.4.2 Applicability of Empirical and Analytical Evaluation Approaches to Software
7.4.3 CO.CO.MO Method and Putnam Model
7.5 Open-Source Software
7.6 Software as a Service (SaaS)
7.7 Definition and Characteristics of Databases
7.8 Legal Protection
7.9 Accounting and Fiscal Aspects of the Database
7.10 Information Value Chain, Data Mining and Interaction with Networks, Big Data, and the Internet of Things
7.11 Economic Valuation of Database and Links with Cloud Computing
7.11.1 The Cost Approach
7.11.2 The Income-Financial Approach
7.11.3 The Empirical Approach
7.11.4 New Assessment Scenarios and Monetization Strategies
Notes
Selected References
8 The Valuation of Artificial Intelligence
8.1 Introduction
8.2 The Fundamentals of Artificial Intelligence
8.3 Applications and Business Models
8.4 Legal Aspects: Introductory Notes
8.5 Valuation Metrics
8.6 The Financial Method
8.7 The Empirical Method of Market Multiples
8.8 Forecasting Rational Expected Outcomes: Sales Prediction
Note
Selected References
Part III Marketing
9 The Valuation of Trademarks and Digital Branding
9.1 The Trademark’s Differential Strategic Value
9.2 Trademark Accounting
9.2.1 Trademarks and International Accounting Standards: Impairment Test and Inapplicability of the Fair Value
9.3 The Evaluation Standard ISO 10668
9.4 Economic, Financial, and Accounting Analysis
9.5 Valuation Approaches
9.5.1 Income Approach
9.5.2 The Relief-From-Royalty Approach
9.5.3 The Incremental Income Approach
9.5.4 Market Approach
9.5.5 Cost Approach
9.6 Other International Evaluation Standards
9.7 Brand Equity
9.8 Brand Valuation in Business Crises and Residual Creditworthiness
9.9 The “strong brand - weak company” Paradox
9.10 Logos
9.11 Digital Branding
9.12 The Impact of Advertising Platforms on Brands
9.13 FashionTech and Digital Clothing
9.14 Digitalization and Sports Brands
Notes
Selected References
10 The Valuation of Newspaper Headings, Digital Media, and Copyright
10.1 The Characteristics of Newspaper Headings
10.2 Accounting Issues and Tax Treatment
10.3 Valuation Approaches
10.3.1 The Contextualization of the Assessment, Depending on the Type of Heading
10.3.2 The Valuation Paradox “Strong Heading, Weak Publishing Company”
10.4 The Online Headings
10.5 The Valuation of Thematic Channels
10.6 The Prospects of the Media Sector, from Paper to Digital
10.6.1 Legal Protection of Editorial Headings and Copyright: Some Introductory Notes
10.7 Digital Publishing
10.7.1 Forms of Digital Publishing
10.8 Bankability of the Newspaper Headings
10.8.1 Copyright and Artistic-Related (Creative) Intangible Assets
10.8.2 Digital Media and Video Games
Notes
Selected References
Part IV Internet and the Metaverse
11 Domain Name and Website Valuation
11.1 Introduction
11.2 Input Parameters for Valuation
11.3 Characteristics of Sellable Domain Names
11.4 Accounting Data
11.5 Web Search Engine Ranking
11.6 Internet Traffic and Advertising Impact on the Evaluation
11.7 Web Analytics
11.8 Ranking Parameters
11.9 Domain Auctions
11.10 Other Valuation Parameters
11.11 Valuation with “Quick and Dirty” Algorithms
11.12 Market Approach
11.13 Premium Domain Names
11.14 The Valuation of Stand-Alone Domain Names
11.14.1 Domains and (Web) Trademarks
11.14.2 Domains and Social Networks
11.15 Cybersquatting, Typo-Squatting, and Domain Trolls
11.16 Internet Protocol Addresses
11.17 Conclusion
Notes
Selected References
12 The Valuation of Mobile Apps
12.1 Definition and Types
12.2 Digital Value Chains: From Development to Dissemination of Apps
12.3 Accounting and Fiscal Aspects: An Introduction
12.4 The Business Plan and the PESTLE and SWOT Analysis
12.5 Economic Valuation
12.5.1 The Cost Approach
12.5.2 The Income-Financial Approach
12.5.3 The Empirical Approach
12.6 Criticalities of the Valuation Assessment
12.7 Financing App Developers
Notes
Selected References
13 Big Data Valuation
13.1 Introduction
13.2 Big Data 10Vs
13.3 Big Data Regulation
13.4 The Value Chain
13.5 Data-Driven Information and the Impact on Know-How
13.6 The Dark Side of the Web: Criticalities of the New Information Paradigms and Impact on the Economic Value
13.7 Big Data and Augmented Business Planning with Real Options and Stochastic Projections
13.8 Networking Ecosystems
13.9 Big Data and Bankability
Note
Selected References
14 Internet of Things Valuation
14.1 Internet of Things and New Intangible Assets
14.2 Internet of Things, Networks, and Big Data: A Synergistic Interaction
14.3 Internet-Related Product and Process Innovation and B2B and B2C Solutions
14.4 Valuation of the Portfolio of Internet-Related Intangibles
Note
Selected References
15 The Valuation of Internet Companies, Videoconferences, and Social Networks
15.1 Internet Companies and Videoconferences
15.2 Networks
15.3 Network Theory: An Introduction
15.4 Social Networks and Social Media
15.5 The Firm as a Coasian Nexus (Network) of Contracts
15.6 Social Networks Diffusion
15.7 Misinformation in the Age of the Internet: Fake News and the Right to be Forgotten
15.8 Sharing Economy and Value Co-creation
15.9 Personalized Marketing, Social Networks, and Digital Branding
15.10 Social Network Valuation
15.11 Valuation With Traditional Methodologies
15.12 Specific Valuation Methodologies
15.13 Valuation With Real Options
Note
Selected References
16 Blockchain Valuation: Internet of Value and Smart Transactions
16.1 Blockchains: Definition and Main Features
16.2 Disrupting Traditional Business Models
16.3 Internet of Value
16.4 The Legal Nature of Public or Private Blockchains as a Prerequisite for Valuation
16.5 Economic and Financial Valuation
16.5.1 Accounting of Intellectual Property as a Prerequisite for Valuation
16.5.2 General Valuation Methodologies
16.5.3 Financial Evaluation
16.5.4 “With or Without” Incremental Valuation
16.6 Conclusion
Notes
Selected References
17 Cryptocurrencies, Non-fungible Tokens, and Digital Art Valuation
17.1 Cryptocurrencies
17.2 Non-Fungible Tokens
17.3 Digital Art
17.4 Timestamps
17.5 Evaluation Approaches
17.6 Valuation of Intangible Assets
17.6.1 Cost Approach
17.6.2 Income/Financial Approach
17.6.3 Market Approach
17.7 Interactive Art (Participatory or Relational) and Value Co-Creation
17.8 Copyright Framework and Evaluation
17.8.1 Exploitation and Copyright Protection
17.8.2 From Copyright to Copyleft and Creative Commons
17.9 Reproducibility of Works, Real Options, and Digital Scalability
17.9.1 The Secondary Market
Notes
Selected References
18 Metaverse: A Digital Network Valuation
18.1 The Metaverse
18.2 Scale-Free Networks and the Metaverse Topology
18.3 Scalability and the Network Effect
18.4 Multilayer Networks
18.5 Sliding Doors: Network-Bridging Multi-Sided Platforms
18.6 From the Internet to the Metaverse
18.7 Synchronizing the Physical and Virtual: The Avatar Bridging Node
18.8 A Holistic Ecosystem: From Physical Reality to the Internet and the Metaverse
18.9 The Metaverse Monetization
18.10 Value Co-Creation and Economic Marginality
18.11 Metaverse Evaluation with Multilayer Network Analysis
18.12 Concluding Remarks
Notes
Selected References
19 Cloud Storage Valuation
19.1 Introduction
19.2 The Market
19.3 Digital Networks and Metcalfe’s Law
19.4 Networking Digital Platforms
19.5 The Nature of Cloud Computing as a Prerequisite for Valuation
19.6 The Accounting Background for Valuation
19.7 Valuation Methods
19.7.1 The Financial Approach
19.7.2 Empirical Approaches (Market Multipliers)
Notes
Selected References
20 The Valuation of Digital Platforms and Virtual Marketplaces
20.1 Definition and Features
20.2 Legal Aspects
20.3 Networked Governance Around Digital Platforms
20.4 Digital (Smart) Supply Chains
20.5 The Assumptions of Evaluation Between Digital Scalability and Network Theory
20.6 A Theoretical Background for the Economic Valuation
20.7 Open-Source Platforms
20.8 Proprietary (Commercial) Platforms
20.9 Adaptation of the General Valuation Approaches
Selected References
Part V Residual Goodwill, Bundled Intangibles, and Bankability Issues
21 Digital Goodwill Valuation
21.1 The Controversial Concept of Goodwill
21.1.1 Accounting
21.1.2 Useful Life, Limited Period of Use, and Impairment Test
21.2 Badwill
21.3 An Introduction to Valuation
21.4 The Estimate of Goodwill: Fair Value, Value of Use, Impairment Test, and Firm Valuation
21.5 Competitive Advantage Period and Monopolistic Rents
21.6 Economic and Market Value-Added
21.7 A Cocktail of Approaches for an Integrated Assessment
21.8 Valuation of Turnaround Companies
21.9 Customers’ Portfolio, Churn Rates, and Value Per Client
21.10 Bankability Issues
21.11 Digital Goodwill
Notes
Selected References
22 Portfolio of Intangibles, Smart Infrastructural Investments, and Royalty Companies
22.1 The Portfolio of Intangible Assets
22.2 Smart Cities and Smart Hospitals
22.3 Digital Infrastructural Investments with Public–Private Partnerships
22.3.1 The Risk Matrix
22.3.2 A Synthetic Financial Measure of Risk: WACC
22.4 Royalty Companies
22.5 Centralization of the Intangible Assets with a Royalty Conduit Company
22.6 Royalties Charged to the Licensee
22.7 The Capital Structure of the Royalty Company and Its Borrowing Capacity
22.8 Valuation of the Royalty Companies: Intangible Synergies and Holding Discount
22.9 The Creditworthiness of the Intangible Portfolio and Royalty Companies
Notes
Selected References
23 Digitalization and ESG-Driven Valuation
23.1 Introduction
23.2 The Big Accounting and Market Picture
23.3 From Book to Market Value of Equity
23.4 TOTEX (CAPEX + OPEX) and Capital Budgeting
23.5 Sustainable Business Planning
23.6 DCF and Cost of Capital Metrics
23.6.1 The Cost of Collecting Capital: A Comparison Between Traditional and ESG-Firms
23.7 Networking Supply and Value Chains, Mastered by Digital Platforms
23.8 The Financial Value of Growth: Multi-Stage Cash Flows and Dividends
23.9 ESG Drivers and Ethical funding
23.10 Sustainability Patterns
23.10.1 Circular Economy
23.10.2 Resilient Supply and Value Chains
23.10.3 Sharing Economy and Collaborative Commons
23.10.4 Scalability and Real Options
23.11 Beyond Market Value Maximization: Toward a New Theory of the Firm?
23.12 Corporate Governance Implications
23.12.1 Beyond Fake News and Greenwashing: Data Validation with Blockchains
23.13 ESG Reporting and Investment Management Process
23.14 ESG-Compliant Investment Ratios
23.15 The Relationship Between The ESG Drivers And The Investment Parameters
23.16 Facing the Green Swan: Climate Value at Risk (VaR)
23.17 Green CAPEX
23.18 The OPEX Dilemma: Inside the Green Supply Chain
23.19 ESG-Driven Goodwill
23.20 ESG-Related Bonds
23.21 Smart Capital Structure and ESG-Compliant Pecking Order
23.22 ESG Behavioral Finance
23.23 From ESG to PESTLE Considerations
23.24 An Empirical Analysis
23.25 Concluding Remarks
Notes
Selected References
24 Corporate Governance Concerns and Bankability Issues of the Digital Assets: More Guarantees with Less Collateral?
24.1 Leveraging Intangible Assets
24.2 Unsecured Intangible-Driven Growth
24.3 Information Asymmetries and the Signaling Effects of Intangible Assets
24.4 Types of Debt and Support Guarantees
24.5 The Financial Hierarchy in the Use of External Capital
24.6 Profitability and Borrowing Capacity in a Going Concern Context
24.7 Market Value as Collateral in an Insolvency Scenario
24.8 Intangible Assets, Rating, and Borrowing Capacity
24.9 Cover Ratios and Other Bankability Parameters
24.10 Impact of Intangible Assets on Borrowing Capacity
24.11 Information Asymmetries and Debt Rationing
24.12 Corporate Governance Concerns in a Digital Scenario
Notes
Selected References
Index