The value of anything is measured by its relative worth as compared to all other things of a similar nature. The value of a diamond is determined by its weight, size and clarity, in comparison to all other diamonds. Similarly, an office building is valued by its occupancy, location, condition and square footage – in relation to all other office buildings in the area. You can study appraisal for years, but it always comes down to comparing the present market value of like objects.
My firm was hired to value 61 titles of a copyrighted motion picture library, owned by a local film distributor. What we had to do was break down each film by its director, stars, genre, original box office success and its relative home media exposure. This we compared to hundreds of other films of a similar nature. My firm gave a weight to each factor and eventually assigned a monetary value to each of these factors, and the library in aggregate. A painting, a television show, a film or an art collection is basically valued by the same methodology. It requires a lot of research and number crunching, but in the end, the owner of the property is going to have a pretty accurate assessment of what his intellectual property is worth.
Of course, the value of anything is ultimately determined by what someone is willing to pay for it. After 23 years in the mergers & acquisitions business I have seen buyers pay what I thought was a high price for a company (or its assets) and sometimes I thought they were getting a real bargain. But, that tends to be dictated by the laws of supply and demand. While every company is somewhat unique, the suitors, keen on making a smart acquisition in the industry, will have looked at possibly dozens of other potential companies to buy. They will compare each company, not just to others of a similar size and business, but to how difficult or easy it will be to buy, assimilate, and monetize the acquired assets/sales/customers and culture of the acquired company. That’s why it is important that any company putting itself up for sale has their house in order; books and records shipshape, dead inventory and problem assets off the books, sales and marketing at full throttle.
Remember, ultimately what you are selling is your diamond. And your diamond is valued by how it shines against all the others.