In ‘Pitchology’ Podcast Interview, Partner Andrew Sherman Discusses Importance of Intangible Assets

Partner Andrew J. Sherman discussed the importance of intangible assets in business deals in mergers and acquisitions on the “Pitchology” podcast.

In the May 1 episode, hosted by entrepreneur Steve Distante, Sherman said he believes there will be a shift over the next five to 15 years in how intangible assets are going to define enterprise value. He added that he’s not sure that some multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) is the best way to define enterprise value. But he recommended monitoring intangible assets, both as a buyer and a seller.

“These intangible assets, which I feel we are grossly underleveraging as a matter of strategy in corporate America and around the world, end up being some of the most valuable assets in M&A transactions,” Sherman said, citing Microsoft’s $26 billion acquisition of LinkedIn, which went from the red to having an enterprise value of more than $100 billion.

Sherman also talked about the challenges of building a business to sell it. “What many entrepreneurs never figure out is when it comes to M&A, it’s not about you, it’s about them,” he said. “You can be as creative as you want, you can pursue as many different projects but at the end of the day, people buy your business because of where it strategically fits with them, not you.”