Re: IS Assets

[HankHeath@xxxxxxx]

To summarize responses to this point:

If you are part of the IS team asked to value the IS shop in a merger or 
acquisition, you can say 
* the hardware is worth the purchase price minus scheduled depreciation
* the purchased software is a very small fraction of the original purchase 
price
* developed software is worth whatever the purchaser sees it to be (this may 
be a major feature of the transaction, as in a Web-based business, or 
meaningless, as in home grown accounting software)
* the staff is worth whatever it costs to replace the half of them that leave.

Pretty dismal, unless you are a Web-based business. It would seem that 
generally we do not contribute much to the net worth of the company, from an 
accounting perspective. At the same time, we do contribute a lot to the 
operational costs to the enterprise. 

In view of this, if I was palnning to sell a company, the first thing I would 
do is outsource IS. I could rationalize that since there is little inherent 
value to be passed on, it makes sense to minimize the expenses by turning the 
operations over to a professional firm. When the sale was transacted, the new 
owner would not have to worry about software maintenance and staff turnover. 
They would walk into a stable environment. Does this make sense?

Hank Heath

In a message dated 8/3/99 8:22:27 PM Eastern Daylight Time, HankHeath@aol.com 
writes:

<< Here's a question that came up recently:
 
 If we are selling a business, how do we value the worth of the IS assets? In 
 otherwords, on a balance sheet, what value is retained from IS during a 
 transfer to another owner? I can value the hardware easily. However, there 
 are also values that can be tacked on for software purchased and developed, 
 the unique industry knowledge of the staff (if the new owner can retain 
 them), and the ruggedness of the environment. Has anyone a way of attaching 
a 
 value to any of these last items? >>
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