Why are customer relationships valuable?

Strong customer relationships are integral to your organization and may well be the trigger for acquisition by a third party. IP assets within this area are of greatest value when there is an element of uniqueness, or loyalty or where they serve as a barrier to entry to competitors. These customer relationships may be vital for market expansion, increases in sales, investment from interested third parties or upon company exit. The level of formality in these relationships is also of value, are they backed by contracts, maintenance agreements or just loyalty demonstrated by certain customers coming back to buy year after year.

Customer information is often closely guarded by companies and is usually held in the form of a database, a valuable IP asset in its own right and the closer you are to your customers and the more valuable information you have on those customers, adds further value to these business assets.

Critical partners or suppliers typically offer some level of competitive advantage to block out competitors, via an exclusivity clause or through product or market development. In each case, a company is usually seeking a competitive advantage from the relationship.

These assets can therefore be translated into value increasing the value of the business.