1. bengin The Intangible Evaluation The Service Version 2.0 Draft, not for Distribution bengin - The Intangible Evaluation – The Service V2.0_e.ppt

2. Index The new Business World The bengin.com approach The Benefit for the customers The MindSet: how does it work? Some examples from the market More ways to use the analysis Additional Types of analysis

3. Complexity of the new Business World rises and the Business Models have to reflect this Value to be Mapped Value to be Mapped Business Model intangible tangible new old T

4. Real Economy We have developed new models for the classic and the new Business to deliver new solutions Customized Solution Form & Content SoftWare Application Operating System Hardware MindWare Application Business Theory Basics Root Oracle SAP SAS... Root Oracle SAP SAS... Microsoft E&Y KPMG PwC AA.... B’E Systems Partner b Partner a Partner..

5. 1. Structure 2. Quantity 3. Direction 4. Optimization We developed the original know-how, the procedures and the instruments to analyze the new Business World and to find the needed Solutions.

6. We concentrate on the evaluation of the total assets of a company, because.... „ YOU CANNOT MANAGE WHAT YOU CANNOT MEASURE “! 2. Quantity The total value of a company is the sum of its Tangible and Intangible Assets. Only by managing the Tangible Assets (money based) and the Intangible Assets (Knowledge, Skills, Market Position, etc.) the company can achieve their goals successfully. Intangible Value Tangible Value T I Total Value The Value Vector

7. Evaluating the Intangible, our customers can gain in various ways Large, international companies, mid-sized companies and governamental Departments and Institution:  To analyze their current position and development over time  To plan internal changes  To plan mergers and acquisitions  To plan spin offs and oursoucing  To evaluate the market position (benchmark)  To evaluate the productivity of various Business Units  To evaluate new projects (integration in the company assets) ........

8. Investment companies and Venture Capitals:  To evaluate the potential of an investment (e.g. in a start up, etc)  To plan the future „exit strategy“ ........ Start up companies:  To explain (calibrate) their own potential to an Investor  To show the development over time of their own potential ........ Evaluating the Intangible, our customers can gain in various ways

10. Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... Example 1 (same company, 2 times): The SMV at time 1 and at time 2 are the same. The BSV 2 is though only half of the BSV 1. On the other hand the Intangible Value 2 is 30% higher the Intangible Value 1. Why? Purchase of patents? Introduction of a new product line? Other? The company invested money (Tangible Value) to create the potential for the future (Intangible Value) Intangible Value Tangible Value BSV 1 I 1 SMV at time 1 BSV 2 I 2I 2 SMV at time 2

11. Intangible Value Tangible Value BSV 1 I 1 SMV 1 SMV 3 BSV 3 I 3 Example 2 (same company, 2 times): The SMV at time 1 and at time 2 are the same. The Balance Value 3 increased by 20% compared to the Balance Value 1. On the other hand the Intangible Value 3 is less than half of the Intangible Value 1. Why? Sale of a department? Sale of patents? Other? The company transformed Intangible Assets into money based value (Tangible Assets) Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then...

12. If in example 1 it is NOT TRUE that..... The company invested money (Tangible Value) to create the potential for the future (Intangible Value) e.g. Purchase of patents? Introduction of a new product line? If in example 2 it is NOT TRUE that..... The company transformed the Intangible Assets into money based value (Tangible Assets) e.g. Sale of a department? Sale of patents? What happened then? Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... Intangible Value Tangible Value BSV 1 Int. 1 BSV 3 Int. 3 SMV 2 Int. 2 BSV 2 SMV 1 SMV 3

13. What happened then? Maybe the company is just loosing good people: yes, there are less costs but.... Maybe the company is spending too much on marketing.... Maybe the people are not receiving any training: yes, there are less costs but any know-how in the new technology... If the combination of tangible and intangible assets cannot be explained by the company`s strategy, decisions, actions......then we must look deeper. The causes need to be discovered in order to better manage the company Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... Intangible Value Tangible Value Int. 1 Int. 3 Int. 2 SMV 2 SMV 1 SMV 3 BSV 1BSV 3BSV 2

14. 1. Analyze the structure and development of the Intangible Assets Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... Intangible Value Rights Intangible Value Tangible Value BSV 1 I 1 Market Position Know how Skills R&D Organ & support Meth. & QA Tangible Value BSV 2 I 2 MP KH R O&S M. & QA ? Balance difference SMV 1 SMV 2

15. 2. Identify the changes/problems.... 20 66Number of procedures/methodology M & QA8 75%80%Use of IT infrastructure (PC and Laptops/employee) O & S7 12 Number of patents (Copy- rights, Design, etc) Rights6 300500R & D hoursKnow-How5 85100Number of trained employees Know-How4 122200Number of employeesKnow-How3 400‘000200‘000Marketing costsMarket Position 2 20% Market shareMarket Position 1 „Time“ 2„Time“ 1IndexObjectNr Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then...

16. 3. Discover the reasons People left – see Nr 3 Reason not clear! Organized event to launch new products Reasons Consequence of Nr 3 Yes, it need to be solved! no Actions needed? 300 122 400‘000 „Time“ 2 500R & D hoursKnow-How5 200Number of employees Know-How3 200‘000Marketing costsMarket Position 2 „Time“ 1 IndexObject Nr Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then...

17. 4. Prevent problems today and avoid loosing money tomorrow! Corrected only by solving Nr 3 Decrease in R & D & production Inability to deliver Loss of customers Decrease of Stock Exchange Value! - Consequences within the next 6 to 12 months Consequence of Nr 3 Yes, it need to be solved! no Actions needed? People left – see Nr 3 R & D hoursKnow-How5 Reason not clear!Number of employeeKnow-How3 Organized event to launch new products Marketing costsMarket Position 2 Reasons IndexObject Nr Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then...

18. By analyzing only the Tangible Assets (money based) you would recognize the problems TOO LATE. The Intangible Assets of today represent the Tangible Assets of tomorrow, therefore knowing them will help you manage the total assets of the company better. In this example: Knowing the possible internal problems 6 to 12 months in advance will allow you to correct the problems before they effect the company Market Value! Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then...

20. A better working instrument for showing overpriced papers : Example Coca Cola Amatil Stock Exchange Value 0 2000000000 4000000000 6000000000 8000000000 10000000000 12000000000 Jahr 1990Jahr 1991Jahr 1992Jahr 1993Jahr 1994Jahr 1995Jahr 1996Jahr 1997Jahr 1998Jahr 1999 96 97 98 99....a year before the classic Market Analysis, the Intangible Assets Analysis of BE-Solution could foresee a change by Coca Cola.........

21. It is possible to analyze the development of the company‘s asset. Example: a part of ABB The answer for the question – "What happens in the year 1996?" – is easy: Part of enterprise sold. It is after all a question of the quality of Management if this loss of intangible values is compensated by the price received for the sold enterprise.

22. Intagible assets or Shareholder Value Expectation? 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 Intangible Value [i - Mia] TangibleValue [Mia] - McDonald's The Tangible Value and the Intangible Value together gives a complete picture about the company value and its development. The question remain: Are all Intangible Assets or part of it is only Shareholder Value Expectation? Microsoft IBM Ford CocaCola

23. Analyzing enterprises with the above mentioned instruments leads to fundamentally new decisions on the side of the managers as well as of the side of shareholders, which have nowadays a better/good working instrument for showing overpriced papers. A better model for new decisions Investors: Attention! Management should use potential more effective

25. More ways to use the analysis: Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value To evaluate and decide if it is better to „Make“ or „Buy“ To evaluate and decide for an acquisition (Tangible and Intangible) To evaluate productivity, e.g. the „transformation“ of Intangible into Tangible To Benchmark To evaluate the benefits of a merge......... This can be done at various levels: Whole Company, Business Unit, department, process or project.

26. Additional types of analysis Turnover (Total value) vs. Total costs (Tangible) e.g. knowing the Total Value (Turnover) and the Tangible Value of a company (Total costs) it is possible to analyze what value is generated by the company (know how, etc.) To analyze productivity To analyze resource allocation (intangible ROI) To analyze Value Chain profitability To evaluate a possible spin off or merge To compare the values of different departments This can be done at various levels: Whole Company, Business Unit, department, process or project.

27. Additional types of analysis Total costs (Total Value) vs. „Total costs minus Personal costs“ (Tangible) e.g. knowing the Total Value (Total costs) and the Tangible Value („All cost minus Personal costs“) it is possible to analyze what value is generated by the people (know how, etc.) To analyze the productivity of employees To analyze the value of training To compare the values of different departments This can be done at various levels: Whole Company, Business Unit, department, process or project.

28. Contact: Peter Bretscher Ingenieurbüro für Wirtschaftsentwicklung Alpsteinstrasse 4, CH-9034 Eggersriet peter.bretscher@bengin.com ++41 (0)79 650 49 04