Intangible Asset Unfamiliarity

May 11th, 2017. Published under Intangible assets contributory value., Transaction negotiations and intangible assets.. No Comments.

Michael D. Moberly May 11, 2017 ‘A business intangible asset blog where attention span really matters!’

Not infrequently, when a particularly challenging and risky business transaction is undertaken by a company, but ‘goes south’, it should prompt review by an IA strategist and risk specialist. If so, one likely revelation is that transaction under-performance or failure is variously attributable to operational – circumstantial unfamiliarity with, how, when, why, where, and which IA’s were in play but, not acted on effectively, lucratively, or competitively. Or, the IA’s were insufficiently safeguarded with risks left unnoticed, unmonitored, and unmitigated to influence one or both parties to ‘walk away’.

IA unfamiliarity, frequently translates-materializes as the omission of IA’s from transaction planning and execution, which leaves their contributory role and value, projected sources of revenue, and competitiveness out of a transaction’s ‘go, no go’ equation, and otherwise, off the (transaction) negotiating table. It is true, that the dominant drivers and ‘underwriters’ to most every business transaction are the IA’s which are and will inevitably be in play. As such, they will be vulnerable-receptive to various types-levels of risk, e.g., competitive advantage under-mining, targeted erosion of (asset) value, and/or numerous types-levels of compromise.

It is necessary today, that businesses and their management teams recognize risk can materialize in other than single, unrelated acts or events. Quite the opposite, any one, or multiples of risks may occur simultaneously and/or in ‘chain reaction’ contexts and wholly negate or substantially minimize projected-desired outcomes, even more so when (IA) unfamiliarity and risk mitigation are either absent or executed in a mediocre manner.

Similarly, poorly planned and executed business transactions that experience underperformance or failure are seldom, if ever, ‘one off’ events, but, never-the-less, may be redeemable. With numerous (IA dominant) engagements behind me, I have come to conclude that not an insignificant percentage of the issues businesses and management teams experience regarding their IA’s, irrespective of how evident and present they are, is variously attributable to those assets being ‘non-physical’, i.e., outside conventional (human) senses of sight, sound, touch, or smell, and therefore, they find it intellectually challenging to converge (the intangible) with the conventions of tangible-physical assets. Another consequence of asset ‘intangibility’ is that it can dissuade some business leaders and management teams from recognizing IA’s as being relevant players and/or contributors to company value, competitiveness, revenue, or sustainability.

It is true, a percentage of business leadership, remain variously dismissive and under-appreciative of IA’s, i.e., what they are, and how to utilize (exploit) them effectively, lucratively, and competitively, in other words, recognizing their contributory role, value, and competitive advantages which they can, and often do, produce. Not so coincidentally then, when IA’s are treated dismissively or wholly neglected, their contributory value can be significantly weakened, conceded to competitors, or relegated to the non-denominational and virtually unusable ‘catch-all’ of goodwill.

Either way, I find there is no single mechanism to overcome these real and detrimental shortcomings, aside from seeking – achieving operational level familiarity with IA’s for which one has control, use, ownership, and (fiduciary) responsibility to safeguard, exploit, monetize.

Consistently, I find, practitioners who possess operational familiarity with IA’s, especially those in play to a transaction or initiative as contributors to projected value, revenues, competitive advantages, and marketing and branding outcomes, also possess operational insights that extend well beyond merely what’s posted on conventional financial statements and balance sheets.

As always comments are welcome!

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