VC GLOSSARY

Identifiable assets are ones that can be quickly and accurately valued at a given point in time. They should be able to be assigned a fair value or expected selling price. 

Identifiable assets could potentially be sold off separately without selling the whole business, though in practice they will usually be sold as part of the business.

Identifiable assets can be tangible or intangible.

Examples of tangible identifiable assets include:

• Cash, such as the company’s war chest
• Inventory
• Buildings or land owned by the company
• Machinery, such as laboratory equipment
• Computers and computer equipment
• Company vehicles

Intangible assets include items with no physical substance, but which could be valued and even sold. These include things like:

• Customer lists
• Domain names (website addresses)
• Patents and trademarks
• Contracts and licensing agreements
• Computer software
• Trade secrets, such as secret recipes

Identifiable assets can be quantified, but goodwill cannot. Goodwill is used to cover things like customer loyalty, brand reputation, and other assets that can’t be assigned a clear value.

Goodwill is a type of intangible asset and should normally be listed on the balance sheet as a separate line from other (identifiable) intangible assets. It’s sometimes called an “unidentifiable asset.”

Goodwill cannot exist separately from the business. It can’t be sold or transferred. Its value is based on perceptions of the company, rather than on a fair and objective market value.

When an acquiring company purchases a target company, the value of the identifiable assets is subtracted from the amount paid for the company. The remaining money spent is the worth of the goodwill.

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