It is estimated that the world is producing about 2.5 quintillion bytes of data per day, with 90% of all data having been produced in just the last two years. (A quintillion is a number followed by 30 zeros.) Given this sheer volume, the first thing businesses must do is take stock: how much of it do we have, how are we using it, where are the gaps, where else can we exploit it. There is currently no international consensus on methods for valuing data. However, we are starting to see, and are actively contributing to, the development of standards and protocols in this area. The new International Valuation Standards (IVS 2020) do provide some guidance on the subject, albeit indirectly, in the chapter around “intangible assets”. The standards define intangible assets as “non- monetary assets without physical substance and identifiable (either being separable or arising from contractual or other legal rights)”. The analogy with data is clear, but so are the challenges in applying this definition. We have had some formal input in to educating others in our profession on this subject and the good news is that the same three approaches typically used to value any asset – namely “Income”, “Market” and “Cost” approaches – are still appropriate when it comes to data.
The bad news, however, is that whilst this theoretical underpinning and philosophy can be set out, there is then a job of work to do to turn the cogs and actually do the computation. And, as I say, there is there is currently no international consensus on method.
Scrutton Bland’s Corporate Finance team has extensive insight into the region’s business landscape, allowing them to provide in-depth, independent and professional advice for confidential corporate transactions. For more information please contact Luke Morris at hello@scruttonbland.co.uk or call 0330 058 6559 .
In fact, we at Scrutton Bland are currently writing one.
It seems odd to me, as we move into the 2020s with data taking over everything like The Blob and the evident and increasingly vast power of the big American technology companies, that not many businesses are thinking about this. So, my advice for the 2020s: think about investing in data assets where you have gaps, either organically or through acquisitions. Think about appraising and exploiting those data assets you already have. And think about data assets when you look to raise money or sell your business. For the 2020s will certainly be defined as the “Decade of Data”.
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