Michael D. Moberly December 16, 2011
Without dispute, it’s an economic fact that today 65+% of most company’s value, sources of revenue, and ‘building blocks’ for growth lie in – directly evolve from intangible assets!
But, it’s no longer sufficient for management teams to merely know what intangible assets are or which one’s their company produces and possesses or follow the conventional accounting path of lumping them altogether (indistinguishable) as goodwill. It’s now essential, if not a fiduciary responsibility to:
- sustain control, use, and ownership of the assets
- know precisely how the (intangible) assets contribute to a company’s value, revenue, and sustainability
- understand how to leverage-position the assets to extract as much value and competitive advantage as possible
- exercise effective stewardship, oversight, and management of the assets and consistently monitor their value and materiality.
By achieving this level of operational and financial familiarity with a company’s intangible assets, numerous and enterprise wide multipliers can follow, for example:
1. Add predictability to business transactions when intangible assets and IP are in play by being able to assess the stability, fragility, defensibility, and sustainability of the assets (due diligence).
2. Elevate probability that projected returns will be achieved, competitive advantages will be sustained, asset synergies/efficiencies will occur, and exit strategies affirmed.
3. Achieve effective convergence of accounting, reporting, and asset valuation by recognizing the linkages to:
a. knowledge management programs
b. intellectual property development and enforcement
c. Sarbanes-Oxley and FASB compliance
d. utilizing the balanced scorecard.
4. Reduce probability of costly, time consuming, and momentum stifling legal challenges and disputes regarding the assets by foreseeing circumstances that can ensnare and/or entangle (intangible) assets to impede, erode, or undermine a transaction’s value, competitive advantages, or projected performance.
5. Build an ‘intangible asset’ company culture that contributes to:
a. recognizing, producing, and sustaining control, use, ownership, and value of intangibles
b. providing the necessary awareness to accelerate the pursuit of asset rights issues, i.e., ownership, value, infringement, misappropriation, theft, etc.
6. Develop a comprehensive organizational resilience (continuity-contingency) plan that encompasses all forms/contexts of intangible assets in order to produce a stronger and quicker recovery following a significant business disruption or natural disaster.
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