Associates

The New Economy

Over the past two decades there has been a dramatic shift in the way the market has valued publicly listed companies. In the early 1980s tangible assets such as plant and equipment, accounts payable and receivable, inventory, formalised processes and so on accounted for over 60% of a firmís market value. Today, tangible assets often represent less than 20% of the market value asset base.

Intangible assets have become the key drivers in the new economy. Things like leadership and governance, know-how, tacit knowledge, credit ratings, plant flexibility, customer and employee loyalty, informal processes, and brand strength are much more important factors when it comes to the future growth expectations of investors.