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Driving InnerProfits

Determining Company Value in an Intellectual Economy. Driving InnerProfits. The Intellectual Economy. Agrarian. Industrial. Technological. Intellectual. The times are surely changing. The Intellectual Economy. “The empires of the future will be empires of the mind” 1943 Winston Churchill.

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Driving InnerProfits

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  1. Determining Company Value in an Intellectual Economy Driving InnerProfits

  2. The Intellectual Economy Agrarian Industrial Technological Intellectual The times are surely changing

  3. The Intellectual Economy “The empires of the future will be empires of the mind” 1943 Winston Churchill

  4. The Intellectual Economy “The world is moving from an economy of goods to an economy of knowledge. From a society dominated by the industrial proletariat to one dominated by the brain workers.” Circa 1960’s Peter Drucker

  5. The Industrial System Finances Intangibles Raw materials Tertiary significance

  6. The Intellectual System technology finances materials Today’s organizations are more dependent on the intangible assets than any previous economy

  7. The Intellectual Economy Balance sheet vs Market Cap – circa 1960 95% correlation Balance sheet vs. Market Cap – circa 2005 28% correlation

  8. The Intellectual Economy What makes up the other 72%? What effect does it have on Value?

  9. The Intellectual Economy Two types of assets Tangible Assets

  10. Tangible assets - examples • An asset that has a physical form such as: • Machinery • Buildings • Land • Bank Deposits • Investments • Inventory • Traditional Balance Sheet Items ONLY 28% of the story

  11. Intangible assets • Legal Intangibles • Competitive Intangibles

  12. Intangible Assets Although intangible assets are hard to identify, they can actually be seen quite easily : External Identity – brand equity, customer and supplier attitude about company, market message Internal Identity – organization structure, systems, processes, ethics, values, dissemination of knowledge, communications, leadership, strategy, team identity Intellectual Identity – talent-capacities, competencies, education, experience, training of it’s people

  13. Why Does it Matter to Me and My Company? • Knowing what drives value helps determine what to do going forward. • Today’s value determines tomorrow’s decisions • in expansion • hiring • capitalization • benefits structure • new shareholders or dilution strategies • When I know it’s value I know what I can expect to be my ROI. That helps me manage my own net worth and the best use of my capital.

  14. Why Does it Matter to Me and My Company? • If the potential value of your company is determined by a large amount of intangibles then how can those be quantified? • If unquantified how much is unmanaged? • If unmanaged then what affect is that on value?

  15. Why Does it Matter to Me and My Company? The answer is, it means everything to the value of your company

  16. Case Study 1 • A Cornell University study of large publicly funded companies, found that companies using “high performance” human capital asset practices have market values that range from between $16,000 and $40,000 per employee higher than firms that do not use such practices. • High Performance was defined as having comprehensive strategies for: • Selection and Workforce alignment • Management and Workforce alignment • Motivation of employees and workforce alignment

  17. Case Study 2 • A Deloitte study of high tech start-ups showed that for firms going public with a high levels of understanding and management of their intangible asset value, the probability of survival is .79; for firms going public with low levels, however, the probability is only .60.

  18. Company Executive Team Tangible Assets Intangible Assets TAA A I M

  19. The AIM Process • Total Asset Assessment • Financial Asset Assessment • 3-5 years financials • Operating agreements • Intellectual Asset Assessment • Key management and executives • Business Strategy Questionnaire

  20. The AIM Process What can you expect to see from the assessment? • Value over time • A quantification of your adjusted risk • What is driving value • ROE / ROA / ROI • Management Team efficiencies / hindrances • Findings / Recommendations

  21. The AIM Process • Recommendations • Shareholder dilution strategies • Merger Acquisition advice • Management development of KPI’s (Key Performance Indicators) • Management development to lower impact on risk • Company specific competency modeling and organizational development • Marketing Message Impact / Analysis / Quantification • Strategic Business development • Tactical business development • Recommendations that drive value up by lowering risk and increasing asset efficiency

  22. IMX Consulting • Dedicated Team of Specialists • marketing • sales • development • coaching • mentoring • training • analysts • consultants • Designing services to drive your performance in value creation.

  23. WE ARE LOOKING FORWARD TO HELPING YOU SUCCEED. SHOKRAN simonv@innermetrix.com www.innermetrix.com

  24. www.innermetrix.com SHOKRAN Head Office Innermetrix International 1 Main Street, Suite 200 Tequesta, FL 33469 Tel: 888-687-2570 France – South Africa – United Kingdom – Egypt – United States - Canada questions@innermetrix.com

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