Speaking as someone who has valued companies for a living, and who currently teaches valuation to graduate students, your points are only partially correct.
The three major drivers of value are:
- Cash flows - higher cash flows lead to higher value
- Expected Growth - higher growth leads to higher value
- Risk - higher risk leads to lower value
Assets are only important as a second order factor (primarily in that they affect cash flows). And there are many factors affecting value that do not show up on the Balance Sheet (or any financial statement) - talent, culture, quality of management, etc.
Your point about not being able to permanently buy talent is true, but that is true for every single acquisition. Unless we have reason to believe that a MSFT acquisition would cause a mass exodus from a studio it is a non-factor.
Ownership of IP can positively affect all three of the value drivers above (higher CF, higher growth, and lower risk) - thus leading to higher values. But ownership of IP is not necessary for high valuations. (I’m using “high” here extremely loosely).
In addition to the firm specific factors affecting valuation, there are also macroeconomic and industry factors that must be considered - and that are frequently changing. For this reason it is absurd to benchmark any valuation in late 2021 against the Insomniac acquisition price from 2019.
All else equal:
- More assets/IP lead to higher valuations
- Higher quality assets/IP lead to higher valuations
The problem is we almost never get the “all else equal” part of that equation. So we cannot just count up IP and assign a value - or conversely say that no IP leads to almost no value.
It’s also true that (in insight) Insomniac was absurdly under-valued. It was literally a “steal of the century” deal in terms of price paid vs cash flow generated. So, using that deal as a benchmark for future acquisitions is also ridiculous.
Edit: I try to avoid putting on my professor persona very often in this forum. I’m sure the above was way too dry and academic for most of the forum. But I felt compelled to chime in here.