What is a Soft Asset?

A soft asset is an intangible asset, such as brand recognition and intellectual capital. Soft assets are also considered to include the human resources of a business, which are its employees and their skills and experience. Soft assets are not normally recognized in an organization's balance sheet, unless they were obtained in an acquisition.

A large part of the value of a business may be comprised of soft assets, especially in cases where products are heavily branded or where intellectual property is needed to devise new products. For example, much of the value of the Coca-Cola Company is generated by its heavy investments in branding. Similarly, the massive number of patents held by IBM allows it to extract substantial licensing fees from other companies.

A soft asset differs from a hard asset, which is a tangible asset, such as a vehicle, building, or machinery.

Examples of Soft Assets

Here are several examples of soft assets:

Intellectual property. Includes patents, trademarks, copyrights, and trade secrets.
Brand value. Includes brand equity and goodwill.
Human capital. Includes employee skills and knowledge.
Customer relationships. Includes customer loyalty and data about customers.
Digital assets. Includes collections of organized data that are proprietary to a company, including customer, market, and operational data.
Processes. Includes methods or practices unique to an organization that drive productivity and profitability.
Contracts and agreements. includes supplier contracts and licensing agreements.