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LEVERAGING VALUE WITH INTANGIBLES: MORE GUARANTEES WITH LESS COLLATERAL?
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Roberto Moro Visconti 
Abstract
This paper shows how intangibles can create scalable value, levered by debt and serviced by intangible-driven incremental EBITDA and cash flows. Intangibles intrinsically incorporate information asymmetries and may so discourage debt, but are also a vital component of cash generating value, so representing a key factor for debt servicing, with paradoxical effects (more guarantees with less collateral?). Operating leverage is enhanced by scalability, an intrinsic characteristic of many intangibles, with a positive impact on cash generation and consequent debt servicing. Ability to improve cash flows emerges as a key feature of value enhancing intangibles, bypassing their lack of collateral value.
Keywords: Intangible Valuation, EBITDA, Cash Flows, Information Asymmetries, Operating Leverage, Scalability, Debt Covenants
How to cite this paper: Moro Visconti, R. (2015). Leveraging value with intangibles: more guarantees with less collateral? Corporate Ownership & Control, 13(1-2), 241-253. https://doi.org/10.22495/cocv13i1c2p3
