Intangible Asset Pre-Post Due Diligence

February 17th, 2017. Published under Business Transactions, Due Diligence and Risk Assessments. No Comments.

Michael D. Moberly February 17, 2017 ‘A business intangible asset blog where attention span really matters!

Re: Mergers – Acquisitions – VC – Market Entry Planning – Litigation Support – University-Corporate Research Alliances -Organizational Resilience

Regardless of however, whenever, wherever, or why IA’s are in play (relative to the various types of transaction noted above) IA specific, and pre-post due diligence is absolutely-essential to each type-category of business undertaking and/or circumstance.

Conceptually, the purpose (intent, objective) for designing pre – post IA-specific due diligence is multi-fold…

1. It is an irreversible and globally universal economic fact (business reality) that 80+% of most company’s value, sources of revenue, and ‘building blocks’ to competitive advantage, reputation, and sustainability lie in – emerge directly from IA’s.

2. When companies, particularly ‘IA intensive and dependent’ ones engage in any type of transaction, it is highly like their IA’s will be in play.

3. A key objective of conducting both pre, and post IA due diligence is to ensure the value, revenue generation capabilities, competitive advantages, and reputation, etc., produced by the IA’s in play, are, and will remain fully intact and the risks will be known and satisfactorily mitigated on both (pre, and post) sides of the transaction.

So, in circumstances in which…

• there has been no due diligence conducted specific to the key IA’s in
play, or

• the due diligence conducted was absent specificity, i.e., was
generic, ‘one-size-fits-all’ and resembled a conventional ‘check-the-box’
(due diligence) template more relevant to physical-tangible assets than
IA’s, or

• due diligence was conducted by personnel operationally unfamiliar with…

o IA’s and their contributory role(s) to retaining transaction value,
revenue generation, competitive advantage, and reputation, etc.,

o risks specific to IA’s that will, when they materialize, adversely
affect (undermine) IA’s contributory value, competitiveness,
transaction sustainability, and likely escalate reputation risk.

In circumstances when one, all, or a variation of the above occurs, the risk portrait for both the transaction and the IA’s in play will very likely shift from the probable to the inevitable, and that’s a ‘bad thing’ for investors and transaction sustainability.

Circumstances such as this, make it all-the-more essential for companies to have expertise at the ready to conduct effective and IA specific pre-post transaction due diligence. And, also, recognize how to leverage – exploit pertinent revelations (emerging from the due diligence) to…

• provide timely – objective insight to principals, i.e., regarding the
status, stability, fragility, defensibility, and sustainability of key
IA’s in play.

• serve as legitimate entrée for re-negotiating transaction terms, i.e.,
o increase probability transaction party will be positioned to hand-off
more valuable, uncontested, and competitive IA’s.
o reduce probability of incurring time consuming, costly, and momentum
stifling disputes that undermine IA contributory value and competitive
advantages.

• elevate principle’s confidence in invest-don’t invest, buy-don’t buy
decisions.

• ensure legitimacy-authenticity of the origins, ownership, contributory
value, and competitive advantages of the IA’s in play.

• determine why, how, who, and when the IA’s in play were targeted, risks
attached and materialized, and asset value-competitive advantage
hemorrhaging commenced, and by how much.

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