Blue Sky Bliss
When it comes to business, the term "Blue Sky" is often misunderstood. Buyers might shy away from blue sky because of the misconception that there is no real value. Blue sky businesses get passed over all the time due to the question, "Why would I buy a business with little to no assets?" The answer: intangible assets are arguably more important than physical assets.
Brand Equity — A business can set itself apart from others based solely on consumer perception. How consumers feel about a product is imperative to a brand's overall value. This is a tremendous part of the premium paid as a goodwill by a buyer to a seller during an acquisition. While brand equity is not a physical asset, consumer perception of a business has value that helps increase sales in any company.
Intellectual Property — The value of intellectual property (creativity, technology, design) is immeasurable when it compares to physical assets. Patents, copyrights, trademarks, and trade secrets are all examples of this type of intangible asset that provides financial worth to a company.
Customer Lists — It takes years to build a plum customer list and it has a decidedly important future value for any business. A solid business has the expectation of repeat customers, which creates value for customer-related intangible assets. All businesses look to build on interactions with previous customers to sell their products and services in the future. A customer list is invaluable.
Goodwill — The intangibles are more valuable than the tangibles. They can be challenging to value, but companies should calculate their fair value. They are the result of grit, dedication and backbone.
A word to the wise: don't shy away from the Blue Sky Bliss.