Analysing intangible assets is a useful tool for valuing a company

Based on the observation that intangible assets account for half of a company’s valuation but do not appear on the balance sheet, Eight Advisory has developed the Iceberg Index© to quantify them and make them explicit. The index is calculated by subtracting the value of operating assets from the enterprise value and comparing the difference with the latter. It highlights seven key components of intangible assets: confidence in the quality of management, reputation and brand, technology and expertise, client relationship quality and retention, organisational performance, development prospects, and environmental commitment. The most intangible sectors such as technology or luxury goods have high indices, while capital-intensive sectors such as energy or automotive have lower values.

The Iceberg Index developed in opposite directions between 2013 and 2024: it rose sharply in the luxury goods and cosmetics sectors, while it deteriorated in the automotive, chemical and telecoms industries due to falling margins.

Eight Advisory has identified eight factors influencing the level this index, four of which are company-related :

• the growth strategy
• the confidence in management
• the diversification strategy
• the financial performance

“The growth strategy is an essential factor,” emphasises Alexis Karklins‑Marchay. “Accounting only reflects acquisitions, not the growth strategy.”

The four other factors are industry-related: the type of asset model, sector-specific performance drivers, the weight of intangible assets in operations, and profitability levels within the sector.

The Iceberg Index© not only makes it possible to better understand and describe a company’s strategy, but also to enhance its valuation in the context of a merger and acquisition transaction, and bolster the confidence of the markets and stakeholders.

Read the full version of this article written by Bruno de Roulhac, published in L’Agefi  on the 3^rd of March 2025 (available in French).

Learn more and request our Iceberg Index© report : Revealing Corporate Value Beyond the Financial Statements