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VALUATION PRACTICES OF INTANGIBLE ASSETS IN ESTONIA
Abstract
The purpose of the article is to examine best valuation practices of intangible assets in Estonia. The paper gives an overview of the methods that Estonian experts use to value intangibles and compare them to the methods and approaches recommended by financial theory. We carried out several dozen interviews with venture capitalists and experts within consultancy and auditory firms. Our main findings indicate that the experience of Estonian financial professionals in the field of valuation of intangibles is rather modest. Still, large auditory and consultation firms have developed their own evaluation methodology for the valuation of intangible assets, while the methodological aspects are not that clearly distinguishable in smaller companies. According to the experts, three classical methods are predominantly used for the valuation of intangible properties: cost-based, market-based and income-based method. Option-based approach has been adopted in just a few cases. Income-based approach is the preferred one, although cost-based method has been utilized, too. Market-based approach has oftentimes been not applicable because of the lack of comparable market transactions in Estonia.
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References11
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