Invisible, but Invaluable: Valuing Intangibles - The Birkenstock IPO

It is undeniable that intangible assets account for a large portion of value at many companies, and that they are increasing as a percent of value across time. Accountants, who have historically struggled with valuing intangible assets, have started grappling with that shortcoming. In my season, sometimes to the point of obsession, I look at why accountants are so focused on valuing intangibles, and argue that it comes from trying to show them on balance sheets. I also note that while accounting is talking the talk on intangible assets, there is little tangible evidence of change in balance sheets - goodwill, which is a plug variable, is 60% of intangible assets on balance sheets, and the gap between market value and book value at companies with intangible assets has widened over time. I use an intrinsic value framework to explain why I don't think that creating special approaches to value intangibles is unnecessary, and how a good intrinsic valuation should incorporate the value of intangibles. In the second part of the session, I use this framework to value Birkenstock, ahead of its IPO. The company is built on intangibles, and I incorporate the value of brand name, celebrity customers, great management and even the Barbie buzz (from Margot Robbie wearing pink Birkenstock in the movie), to arrive at a value of €8.3 billion for the equity in the company, below, but within shouting distance of the IPO pricing of €9.2 billion. Slides: https://pages.stern.nyu.edu/~adamodar... Blog Post: https://www.blogger.com/u/1/blog/post... Birkenstock Valuation: https://pages.stern.nyu.edu/~adamodar...