Acquisitions reveal the hidden intellectual capital of pharmaceutical companies

Acquisitions reveal the hidden intellectual capital of pharmaceutical companies Purpose – This paper aims to assess to what extent intellectual capital is revealed once a company is acquired. Design/methodology/approach – The research question was approached by analyzing official accounts of companies, like annual reports and documents provided to stock exchange authorities before and after the acquisition. In its purchase price allocation the acquiring company is providing insight in the total value of the company acquired. Findings – The mean total value of the companies studied increases approximately six fold on acquisition. This increase is mainly due to the increase in intangible assets (including goodwill), which substantially overlap with intellectual capital. The intangible assets specified are mostly connected to rights‐related and technology‐related items, while goodwill shows more “bias” to expertise and customer‐related items. Thus it is hypothesized that a substantial part of the intellectual capital of the company acquired is revealed in the official accounts of the acquiring company. Research limitations/implications – This study is limited to companies primarily in the pharmaceutical sector. The situation with respect to intangible assets may deviate from the situation in other industrial sectors. Another limitation is the restriction to public companies with respect to the acquiring party because of the information requirements imposed by the authorities. Further, this study was restricted in time to the last seven years in order to have a group of acquisition situations for which similar recent accounting guidelines apply. Practical implications – This line of research could have practical implications for future valuation policies in acquisition situations and for intellectual capital valuation strategies. Originality/value – The paper is a quantitative evaluation of intellectual capital in mergers and acquisitions based on formal accounting records. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Capital Emerald Publishing

Acquisitions reveal the hidden intellectual capital of pharmaceutical companies

Journal of Intellectual Capital, Volume 10 (3): 12 – Jul 24, 2009

Loading next page...
 
/lp/emerald-publishing/acquisitions-reveal-the-hidden-intellectual-capital-of-pharmaceutical-T08s5dUjne
Publisher
Emerald Publishing
Copyright
Copyright © 2009 Emerald Group Publishing Limited. All rights reserved.
ISSN
1469-1930
DOI
10.1108/14691930910977806
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to assess to what extent intellectual capital is revealed once a company is acquired. Design/methodology/approach – The research question was approached by analyzing official accounts of companies, like annual reports and documents provided to stock exchange authorities before and after the acquisition. In its purchase price allocation the acquiring company is providing insight in the total value of the company acquired. Findings – The mean total value of the companies studied increases approximately six fold on acquisition. This increase is mainly due to the increase in intangible assets (including goodwill), which substantially overlap with intellectual capital. The intangible assets specified are mostly connected to rights‐related and technology‐related items, while goodwill shows more “bias” to expertise and customer‐related items. Thus it is hypothesized that a substantial part of the intellectual capital of the company acquired is revealed in the official accounts of the acquiring company. Research limitations/implications – This study is limited to companies primarily in the pharmaceutical sector. The situation with respect to intangible assets may deviate from the situation in other industrial sectors. Another limitation is the restriction to public companies with respect to the acquiring party because of the information requirements imposed by the authorities. Further, this study was restricted in time to the last seven years in order to have a group of acquisition situations for which similar recent accounting guidelines apply. Practical implications – This line of research could have practical implications for future valuation policies in acquisition situations and for intellectual capital valuation strategies. Originality/value – The paper is a quantitative evaluation of intellectual capital in mergers and acquisitions based on formal accounting records.

Journal

Journal of Intellectual CapitalEmerald Publishing

Published: Jul 24, 2009

Keywords: Intangible assets; Goodwill accounting; Intellectual capital; Acquisitions and mergers; Assets

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off