We have encountered in our practice with several Hungarian companies, where the manager does not know the value of the accumulated knowledge and is not able to assign value to the intellectual capital created as a result of many years of work. The good news is that there are many ways of evaluating the knowledge that varies from company to company and is closely linked to their activities. In our present article we summarize those key aspects that a company shall consider if it wishes to determine or increase the value of its existing assets.

What are the components of the companies’ intellectual capital?

  1. Intellectual products

These are typically products, technologies, services and processes that are developed by the company’s employees and are protected by law. That could be for example, a specifically developed product or even a technological feature.

  1. Know-how

Know-how is a technical, economic, or organizational knowledge, solution, experience or a combination of the same, which may also be valuable for the business. Know-how includes, for example, the way as a production line is assembled, documentation systems, process specifications.

  1. Brand

The image that the company has developed over the years and that distinguishes it from others can be of great importance to the company. All online and offline elements of the brand represent value.

  1. Relationship network

For SME-s (as well), a set of personal contacts are extremely important, as the organization of the supply chain and the existence of an “industrial directory” also contribute to the success and value of the company.

How can value be associated with knowledge?

In order to maximize the benefits of intellectual property by the company, it is important to follow a well-structured process. The first step is to identify the value with the help of legal and technical experts. This is important because an expert eye will help to decide what the cornerstones are for the categorization of asset, what options are available to protect it, how to document the accumulated knowledge – for record-keeping and to meet accounting requirements.

How to protect intellectual capital?

The protection of intellectual property is essential. Therefore, it is necessary to document what constitutes part of the company’s intellectual capital both towards to the employees (in an employment relationship or based on other agreement) and to competitors in the market.

What are the benefits of evaluating and protecting knowledge?

It is a fundamental interest of all businesses to carry out the value-increasing process. Whether the aim is to raise finance, attract investors, sell a company or a business, increase market recognition or attract funding, the evaluation of intellectual capital can contribute to all.