Michael D. Moberly June 18, 2008 (This is part one of a multi-part post.)
In today’s high stakes, nanosecond, winner-take-all business transactions arena its important to recognize that in most instances, one or both parties’ intangible assets, IP, and (proprietary) competitive advantages will be a significant part of the deal.
The manner in which a party approaches the transactions’ risk assessment – due diligence (process) is integral to achieving a positive – favorable outcome however, and this process must reach well beyond conventional business valuations.
But, protecting, preserving, and monitoring the value of the intangible assets, IP, and competitive advantages that are in play, in both pre and post transaction contexts, are often overlooked or discounted as to their relevance to the transactions’ success. This attitude is attributed to many things, one of which is the time honored, but today mistaken, assumption that conventional IP protections, patents especially, (still) constitute a sword and shield deterrent – protection against internal – external entities with an opposing and/or adversarial stake in the transactions’ outcome. In other words, the value and benefits those assets may bring can be significantly diluted, undermined, or even irrevocably lost when this process is neglected.
An initial step to try to favorably position the intangible assets, IP, and competitive advantages in play is to conduct a value-based inventory and assessment of those assets that incorporates a ‘business impact analysis’ (pre-post transaction). This is a thorough, systematic, and circumstance specific process that describes the (a.) status, (b.) stability, (c.) sustainability, and (d.) vulnerability of the (targeted) assets in play.
The purpose of this exercise is to enable and facilitate a more secure and profitable transaction to go forward, not impede it! Understandably then, its important to identify those assets that can sustain the transactions’ projected (a.) objectives, (b.) returns, and/or (c.) exit strategy under particular (extreme) circumstances in which misappropriation, business intelligence, and/or infringement, etc., can adversely affect the (pre-post transaction) value and projected benefits of those assets!