British companies are in danger of takeovers and exploitation, a new study has indicated.
Research from the Chartered Institute of Management Accountants (CIMA) found that more than $1.58 trillion (£1 trillion) of assets are totally unaccounted for, meaning British businesses are left vulnerable to underpriced bids and exploitation.
Many of the UK’s company directors and government are concerned about the value of the assets they control, which may have an impact on the government’s long-term economic plan and CIMA’s study is calling for an evaluation of Britain’s intangible assets.
Research found that, since 2012, undisclosed intangible value has risen 50 per cent to $27 trillion (£18 trillion), representing more than a third of the average firm’s enterprise value.
The report suggested that, failing to effectively account for intangibles could lead to short-term economic gains over long-term value, while undermining service-sector dominated economies including the UK.
Britain is good at creating strong brands and is a focal point for businesses that are dependent on intangible assets, including pharmaceuticals, luxury, aerospace and engineering, meaning Britain is the fourth most intangible economy behind America, Denmark and Belgium.
David Haigh, chief executive officer of Brand Finance, said: “This report challenges those leading the debate on our national economic policy. This is an issue which needs a speedy resolution to avoid further national treasures like Cadburys being left to the mercy of foreign buyers and taken over for less than they are worth.
“The issue of inaccurate intangible asset value reporting rose to prominence in the M&A boom of the 1980s.”
Mr Haigh explained that, after 30 years of debate among standard setters in the accounting sector, the next mergers and acquisitions boom is on the way.
Posted by Jon Aspinell on 27th April 2015
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