Archive for 'Intangible asset valuation.'

Intangible Asset’s Contributory Value

February 21st, 2017. Published under Intangible asset mapping., Intangible asset valuation., Intangible assets contributory value.. No Comments.

Michael D. Moberly February 21, 2017 A business intangible asset blog where attention span really matters!

During several engagements, I observed clients becoming frustrated with some (conventional) methodologies for valuing their IA’s. With the intent to mitigate such distractions, I set about developing a respectfully informative basis upon which IA’s could be distinguished and values (i.e., role, worth, materiality) assigned which I refer to the ‘contributory value’ methodology. This methodology allows IA’s contributory value (role, worth, materiality, etc.) to be distinguished relative to a business, a specific project, research, and/or a transaction.

The ‘contributory value’ methodology itself, is not quantitative, in the conventional sense. That is, there is no (one-size-fits-all) mathematical equation or formula used here to calculate and ultimately assign dollar value (ranges) to IA’s. Instead, this methodology demonstrates – reveals graphically, how, where, when, and which IA’s affect (business) value, competitiveness, and revenue, and therefore, deliver – possess ‘contributory value’.

The distinctive simplicity of the contributory value methodology is very relevant to circumstances other than transactions in which IA’s are being bought, sold, transferred, licensed, etc. For example, conducting a contributory value assessment for a business-company, provides leaders and management teams with practical and strategic insights about how, where, when, and which IA’s are being applied (effectively, efficiently) and if – how they affect value, competitiveness, and revenue as well as lucrative strategies for amending the current situation.

The ‘contributory value’ methodology, applied in this context, also reveals (and unravels) far more about a business’s (IA) operational and financial state than conventional, standalone, snap-shots-in-time methods that do not wholly address IA’s relationship – connection, and contribution to other assets. Desirably, the ‘contributory value’ methodology brings clarity to IA valuation by emphasizing the interactive-collaborative relationship and connectivity to (other) IA’s.

My primary rationale for developing the ‘contributory value’ methodology is that it serve as a respectful segue to clients, unfamiliar with IA’s, to better understand and differentiate the how’s, the when’s, the where’s, and the way’s, which the IA’s they and their business produces, possesses, and uses (individually, collectively, collaboratively) affect and/or translate to value.

Too, the ‘contributory value’ approach, through its graphically descriptive content renders IA ‘contributions’ more recognizable, measurable, monitorable, and predictive, insofar as…

• their compatibility with a company’s mission, strategic planning, and operating culture, etc.

• the rapidity and repetitiveness which specific risks manifest to adversely affect any-all IA’s in play.

• evidence of IA compromise, materiality change, and/or value-competitive advantage erosion or dilution.

• executing new product development, launches, and market entry.

• their incorporation into business continuity/contingency (organizational resilience) planning.

• recognizing IA’s life, value, and functionality cycles.

• a means to kick start enterprise-wide IA intelligent culture.

Another equally valid reason for companies to apply the ‘contributory value’ methodology (product) is that, for the foreseeable future, only 20+/-% of the stock price of S&P firms, is explainable solely by the content of conventional balance sheets – financial statements, ala ‘book value’. (Adapted by Michael D. Moberly from the excellent work of Dr. Nir Kossovsky, CEO, Steel City Re)

Intangible Asset Inventory – Valuation

April 8th, 2016. Published under Intangible asset strategy, Intangible asset valuation., Intangibles as strategic assets. No Comments.

Michael D. Moberly April 7, 2016 ‘A blog where attention span really matters’!

“If it can’t be measured, it can’t be managed”, an adage widely attributed to Peter Drucker, that, in my view, carries a different kind of relevance today than when it was initially uttered. That’s because, it is an economic fact that, 80+% of most company’s – organization’s value, sources of revenue, competitiveness, growth, and sustainability derive from IA’s. That’s one thing the naysayers and the cynics of IA’s cannot refute. Whereas, when Drucker uttered this still very substantive phrase, the economies were hardly global, and the assets used to produce goods and services were overwhelmingly tangible, with little interest paid to IA’s.

Still, there are various types of professional services, accounting being one, which are driven by statutes, standards, and guidelines where there is little tolerance – leeway for all things intangible, therefore…

• question the objectivity – validity of IA valuations.
• object to broadening – expanding what constitute IA’s.
• remain firmly committed to conventional asset valuation practices.

Still, prudent and forward looking-thinking management teams and business decisions makers would be hard pressed to describe another time in company/organization governance history when achieving operational familiarity with and measuring and managing the value of knowledge-based assets, the intangible’s, is more necessary.

By identifying a company’s key IA’s, and consistently monitoring – assessing their value and risk, company/organization management teams can be positioned to recognize, in a timely manner…
– erosion – undermining of asset value and competitive advantages through
misappropriation, infringement, counterfeiting, and mismanagement.
– changes in asset materiality and/or asset obsolescence.

When undertaking an IA valuation, it must encompass much more than being a mere snap-shot-in-time. That’s not to imply IA valuations are resource – labor intensive processes. Instead, prudent management teams are obliged to have continual asset assessment-valuation procedures and processes in place, commencing with very keen sensitivity-awareness to an array of internal and/or marketspace circumstances that can influence asset value, competitiveness, and the emergence of risk, which should it materialize, will affect assets’ stability, defensibility, and fragility. Anyone of which, if ignored/neglected can be a prelude to an organization’s IA’s contributory value being undermined, stifled, or worse, irreversibly going to zero!

Consistent monitoring and measuring the contributory/collaborative role and value of key IA deliverables, permits companies, strategic planners, and management teams to be more responsive to…

– utilizing – exploiting their IA’s.
– meeting the ever expanding fiduciary responsibilities associated with IA’s.
– strengthening, managing, sustaining IA value and competitiveness.
– allocating – directing asset safeguard resources more efficiently and
effectively commensurate with an assets’ life, contributory value, and
functionality cycle.
– addressing the inevitable challenges, disputes, and external targeting
engaged in by competitive adversaries.

Prioritizing Public Radio’s Intangible Assets

January 28th, 2016. Published under Intangible asset assessments/audits., Intangible asset valuation., Sustainability of intangible assets.. No Comments.

Michael D. Moberly   January 28, 2016   ‘A business blog where attention span really matters’!

National Public Radio (NPR) is a privately and publicly funded non-profit membership media organization that serves as a national syndicator to a network of 900 public radio stations in the United States.

NPR produces and distributes news and various cultural programming, however, individual public radio stations are not required to broadcast all NPR programs, instead most broadcast a mixture of NPR programs and content from other providers, i.e., American Public Media, Public Radio International, and Public Radio Exchange, as well as locally (station specific) programs.

There numerous qualities My experience in identifying and prioritizing most organization’s IA’s (intangible assets) commences with assessing the assets’ strategic relevance to mission, i.e.,

  • the sustainability – longevity of the asset’s contribution to an organization’s overall value and/or to a particular project or initiative.
  • their consistency insofar as sources of revenue and competitiveness, and
  • their defensibility.

There is an important caveat to this process however, at least through my lens. That is to ensure IA prioritization is not portrayed in a subjective (high, medium, low) continuum context or range estimates, ala Antique Road Show. Instead, asset prioritization should include clear and objective demonstration of their collective, collaborative, competitive, and/or individual contributory role(s) and value.

IA’s, of course, materialize in various ways. For example, relationship capital (an IA) that a public radio station and its staff forge with their communities of listener’s and stakeholders, holds substantial value and frequently triggers new initiatives, projects, and/or programming which in turn deliver multi-layered competitive advantages, i.e., attractive platforms for articulating – communicating issues of the day to all corners of a station’s community of listeners and stakeholders. As it is for any journalistic – news gathering – reporting enterprise, relationship capital is an essential, highly prized, and very valuable IA which embodies, in this instance, a public radio station’s brand.

I am confident public radio leadership appreciate – recognize (station) value, competitiveness, and impact to their respective communities of listeners. These are frequently attributable to prudent ‘envelope pushing’ initiatives, be it through exceptional personnel, new programming, or schedule modifications integrated-enhanced through community outreach, social media, podcasts, an informative website, and a receptively engaging staff. Each serve public radio as legitimate and effective leverage points to…

  • attract capable and creative-innovative intellectual capital (staff).
  • operate an organization with an appealing-gratifying work culture and ethic.
  • deliver substantive content about issues of the day to its communities of listeners, readers, contributors, and sponsors, and
  • strengthen, expand, and ‘bank’ relationship capital.

It is indeed indisputable economic fact that IA’s play increasingly significant roles in organizations, ala 80+% of their value and sources of revenue, etc., lie in – emerge directly from IA’s. So, again, I encourage IA prioritization unravel IA’s relative to their individual and/or collaborative and ‘contributory role-value’, e.g., to a particular project or initiative, a station’s mission and its competitive advantages.

Mr. Moberly is an intangible asset strategist and risk specialist and author of ‘Safeguarding Intangible Assets’ published by Elsevier in 2014, m.moberly@kpstrat.com View Mr. Moberly’s videos on YouTube at ‘safeguarding intangible assets’ or his CNN and CNBC videos at his webpage http://kpstrat.com

Media Sector Intangible Asset Valuation

January 20th, 2016. Published under Intangible asset valuation.. No Comments.

 

Michael D. Moberly   January 20, 2016   ‘A business blog where attention span really matters’!

Admittedly, I sum up my media sector experience (public radio, particularly) as being a consistent, perhaps even, exclusive listener and observer since August, 1982. I suspect for some, this admission may inadvertently detract from this post’s credibility and transferability. To that, I respectfully ask readers of this post do so in its entirety and then draw their conclusions.

For media sector engagements, this IA (intangible asset) strategist, will initially identify the key and contributory IA’s in use – not-in-use, followed by a review of conventional valuation methodologies (described below). The intent is to accelerate management team thinking about the importance of and their fiduciary obligation to distinguish and apply their IA’s effectively

Most asset valuation methodologies, for the media consumer sector will likely apply some variation of unit-based measurement, i.e., identify-assess number of listeners, viewers, followers, down loaders, subscribers, page views and duration, programs listened to, and time variances, etc. Conventional techniques-strategies for valuing these assets generally stem from one or more of the following conventions…

  • Objective Value – that part of asset value that evolves from either its nature, context, and/or how the asset is applied/used.
    • Examples of ‘objective value’ assets are legal or financial documents, strategic alliances, transactions, personnel, employment contracts, and other data/information designated as competitive and proprietary by law or policy.
  • Subjective Value – that part of asset value relative to their contribution(s) to organization value and revenue (e.g., pledges, sustaining memberships, donations, gifts, etc.) which deliver market space leadership, competitive advantages, and enhanced reputation.
    • Examples of assets with subjective value are donor lists, program sponsorships, pricing strategies, community outreach, strategic planning and marketing initiatives, etc.
  • Value-in-exchange – considers the probable actions of consumers, i.e., communities of listeners, contributors, institutional – corporate sponsors and the value at which a particular asset could – would sell if (legitimately) offered on a piecemeal basis.
    • An example of a value-in-exchange asset would be introducing a specialized chemical compound into a production process to improve – distinguish a product among competing comparables. The integration relationship and competitive capital (pre-post production) would manifest as greater commoditization value than the chemical compound itself, if it were standing alone.

Note…many, if not most assets, particularly IA’s, possess collaborative and contributory components which in turn produce-deliver additional value, competitive advantages, and sources of revenue.

  • Value-in-use – is the value of a unit of IA that delivers sustainable contributory value to an organization.  This type of asset is often essential to an organization’s ability to sustain and/or advance market share, its value, sources of revenue, competitive advantages, and reputation, etc., i.e., Coca-Cola’s syrup recipe.
    • For example, growing percentages and categories of IA’s are operationally  integral to an organizations output by consistently contributing to other facets, e.g., customer/client goodwill and satisfaction, etc.
  • Fair Market Value – the price at which a propertied (intangible) asset would change hands…
    • providing there is a willing buyer and a willing seller,
    • with neither party being under any compulsion to buy or sell, and
    • both parties having reasonable knowledge of the relevant facts regarding the assets.

Note…in instances where another’s proprietary IA’s have been illegally acquired – accessed, e.g., through information brokering, economic espionage, or competitive intelligence; without knowing who the ultimate end user of those assets will be and how they will be used, ‘fair market value’ obviously becomes moot or significantly distorted.

Mr. Moberly is an intangible asset strategist and risk specialist and author of ‘Safeguarding Intangible Assets’ published by Elsevier in 2014, m.moberly@kpstrat.com View Mr. Moberly’s videos on YouTube at ‘safeguarding intangible assets’ or his CNN and CNBC videos at his webpage http://kpstrat.com