Intangible Assets, What Companies, Management Teams Are Obliged To Know Now!

February 11th, 2017. Published under Board oversight, Business Transactions, Fiduciary Responsibility, Intangible asset strategy. No Comments.

Michael D. Moberly February 11, 2017 A business blog where attention span really matters!

Integral to business operability, and certainly as a prelude to undertaking – engaging in any new initiative or transaction wherein IA’s are ‘in play’, i.e., bought, sold, acquired, or traded, etc., leadership and management teams are obliged to know, with sufficient specificity, how to distinguish, measure, and monitor…
• what IA’s are, their rightful owner-originator, and which IA’s are in play.
• IA’s contributory role to value, revenue, competitive advantages, and asset commercialization opportunities.
• IA value and performance throughout their respective life, value, materiality, and functionality cycles.
• and, identify and mitigate IA risks in both pre, and post (transaction) contexts, particularly risks which, if materialized, would undermine – erode asset value, a project’s momentum, and most, if not all, competitive advantages.

Today, with ‘keystroke capability’, businesses can rapidly engage in global competition and enter new markets, each variously enabled by at will access to ‘always on’ worldwide (intermodal) supply and distribution channels ala air freight carriers, containerized ocean-rail shipping, and e-commerce.

These comparatively new, but, very integral enablers – components to global trade are consistently tweaking their ‘logistics’ through inputs of intellectual, relationship, and structural capital, ala IA’s, to create more efficiency, speed, capacity, and on-time delivery. Such capabilities permit mature, new, and emerging businesses alike, regardless of size, sector, location, product, or volume, to distribute their products and services whenever and wherever markets exist, or are emerging, and do so rapidly and absent the burdensome expense and time to independently configure conventional supply-distribution channels.

The at will availability-access to these now ‘infrastructured’ intermodal services represent factors that further influence business leadership to look – think more forwardly, e.g., consider where, when, how, and which type-category of IA (ala, collaborations of intellectual, structural, and relationship capital, etc.) should be introduced to produce the most effective, competitive, and profitable outcomes.

A parallel aspect to these ‘infrastructered’ intermodal assets, is recognizing the necessity to consistently invest in developing, acquiring, and integrating nuanced-specific IA’s to accommodate continuous improvement, create efficiencies, sustain-build competitive advantages, increase-stabilize company-IA value, and utilized-exploited to develop new-additional sources of revenue.

An especially important capability, of course, is being able to determine their (IA’s) impact on – relationship to company-shareholder value. This value, in my judgement, and that of others, should no longer be limited by either the content or how conventional balance sheets and financial statements are framed. Instead, company (business) value should convey whether-or-not, i.e., a measure of how well, a company develops, safeguards, uses, and exploits IA’s under its control, e.g., as coordinated spring boards, building blocks, and/or paths to elevating (asset) value, revenue, competitive advantages, and wealth creation potential.

It is indeed an understatement, to assume business operability today is enmeshed in anything less than a ‘sea change’ as its operational interface with IA’s rise routinely. The IA phenomenon is, what I refer to, euphemistically, as an ‘inevitable unknown’. By that, I mean, there were numerous indicators appearing within and throughout companies and businesses, often, in advance of the publication of respected studies which surfaced IA’s actual (contributory) role and value, had more attention been paid.

So, another upshot to this total economic shift to IA’s is business leadership directing – allocating proportionately fewer resources to company’s physical-tangible assets and more resources to IA’s in play, i.e., their development, monetization, and exploitation of (their) competitive-creative capital.

For all the forward-looking insights that surfaced through the Brookings Institution’s ‘Intangibles Project’ and complimentary research conducted in the EU, there is no indication these projects were undertaken solely or even primarily, to influence revisions to conventional (IA) reporting, accounting, taxing, or the standards, statues, and regulations the relevant professions are obliged to uphold. But, to be sure, notions to that affect have occurred.

Leave a Comment