Articles / Recommended Reading / Relationship / Theory

Developing a unique approach to value customer relationships

Image credit: www.wicpa.org

Image credit: http://www.wicpa.org

Developing a unique approach to value customer relationships
PJ Patel, Ed Hamilton, James Budyak

Valuation Research Corporation
Milwaukee, USA

Published by www.wicpa.org
September-October 2012

Since the advent of SFAS 141 and its successor ASC805, the value of customer relationships has been an area of particular focus because there are situations where the common valuation methodologies are not appropriate and valuation practitioners have failed to consider whether the value conclusion was consistent with a market participant’s perspective.

Traditional valuation methods tend to treat customer relationships as a primary asset. In many industries, however, customer relationships are not the most important asset. Practitioners often overlook the fact that customers often purchase products or services because of the presence of intellectual property (IP) — the brand, or the technology — not the presence of a relationship.

(read more – PDF)

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