Michael D. Moberly January 19, 2016 ‘A business blog where attention span really matters’!
As I see it, most conventional asset valuation methodologies are rooted in structured milieus of accountancy regulations and standards codified primarily in earlier business eras when tangible – physical assets were the sole basis for valuation and making projections about worth, growth, revenue, and profitability, etc. Too, most conventional (asset valuation) methodologies have been variously silent on or indifferent to assigning comparable values to a company’s – organization’s IA’s (intangible, non-physical assets) which are rooted in intellectual, structural, relationship, and competitive capital.
Such conventional business (asset) valuation methodologies frequently find application to buy-sell transactions that accentuate tangible (physical, fixed) assets ala those reported on financial statements and balance sheets. But, in my view, these conventional methodologies are essentially snap-shots-in-time that leave the actual sources of organization – company value, competitiveness, and strategic performance out of the transaction (buy, sell, merger) equation by seldom, if ever, distinguishing (recognizing, assessing) the underlying and contributory role and value of IA’s (intangible assets). After all, it is the IA’s that make – render transactions attractive and lucrative and competitive outcomes to happen.
In fairness however, conventional asset valuation methodologies were not designed (intended) to capture – value the intangible. But, that does not negate the need to do so now. After all, even the most ardent advocates of the status quo would now have some fiduciary obligations to acknowledge that IA’s are indeed relevant, integral, and strategic markers for gauging current – future organization value, competitiveness, and performance.
So, through my lens anyway, the conventional valuation methodologies produced largely subjective value estimates, often portrayed in ranges, ala Antiques Road Show, without distinguishing any specific contributory role – value linkage produced by IA’s. It’s reasonable to assume then, in numerous instances, such subjectivity, if in fact it is that, rendered organization leaders and management teams and their stakeholders unnecessarily receptive to engaging in speculative discord, i.e., an incentive for one or both parties engaged in a transaction to instigate prolonged disputes, even litigation, whose outcome is likely to stifle existing transaction momentum, strategic planning, and 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
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