Assigning a value to the purchase and transfer of intellectual capital from one company to another…is challenging in the best of circumstances, even more so when that ‘know how’ is valued at $1.1 billion! Specifically, Google has announced its intent to purchase key intangible assets held by HTC, all related to their mobile (smartphone) division and business.
In other words, Google is seeking to purchase, presumably specific, (1.) structural, (2.) relationship, and (3.) intellectual capital developed – held by a known – targeted group of HTC employees. The epitome of an intangible asset deal, right!
Worthy of mention, previously, in 2011, Google made another proposal; a $12.5 billion offer to buy Motorola’s smartphone manufacturer, Mobility. That transaction however, went south, and subsequently came to be referred, in a less than favorable context, as ‘the Motorola experiment’. Perhaps, one reason was because that proposal encompassed more than specific intangible assets associated with Motorola’s smartphone’s manufacturing business. If that was the case, I suspect the outcome could have materialized differently and better had an experienced intangible asset strategist and risk specialist been invited to offer counsel. Insofar as this current (proposed) transaction is concerned, one presumes, Google decision makers believe, should the proposal materialize, it will lead to ‘creating attractive user experiences to advance their (Google’s) Android ecosystem’.
Being an intangible asset strategist and risk specialist…this transaction, under-taken by Google, represents a ‘millennialized’ example of a motivated buyer, i.e. Google, assigning a dollar value to assets belonging to a motivated seller, i.e., employees of HTC’s mobile division. At least how it is being characterized in various business media,
…the buyer (Google) anticipates – projects, presumably methodically measured, this transaction will produce relatively quick, attractive, and competitive returns for them in the Android marketspace; otherwise why would Google purchase existing-outside intellectual (relationship, structural) capital?
Prudently, this transaction, if it comes to full fruition…includes a non-exclusive license, presumably directed to intellectual property the about-to-be-acquired HTC employees may have knowledge, as well as other relevant (valuable, competitive advantage) intangible assets that will (should be) cited in the sale document.
Moving past the ‘Motorola experiment’…presumably things have changed at Google, claims Rick Osterloh, Google’s hardware chief, ala “these (2,000) future – fellow Google employees (being purchased from HTC) are amazing, and we’re excited to see what we can do together, as one team.” Being variously experienced in the ‘movement – transfer’ of intangible assets, I can assure Google there will likely be multiple challenges, one for sure, will involve the efficient integration and application of the purchased intangible assets in a timely manner and in a different corporate culture.
Prospective buyers of intangible assets; know where, how, and when they were born, reared, raised, and thrived…obviously, the intangible assets now in play, particularly the intellectual capital, functioned – performed well in the HTC environment.
However, truth-be-told, it is unknown (in my judgment, a risk ) how any newly acquired intangible assets will integrate, function, and perform when applied in their new (Google Android) environment. Again, through my lens, and as an intangible asset strategist and risk specialist, with operational level familiarity of intellectual, structural, and relationship capital, it would be preferable to engage in transactions once risks related to intangible asset performance and functionality in their new environment, were clearly identified, assessed, and mitigated. This is especially apropos in this instance, in which Google is spending $1.1 billion to purchase very specific – targeted intellectual capital which likely was born, reared, raised, and thrived in a different (HTC) environment.
Purchasing another company’s intellectual capital and major league baseball…in many respects, this transaction between Google and HTC is variously relevant to the late American baseball player Curt Flood who became a pivotal figure in sport’s labor history when he refused to accept a trade following the 1969 season as a player with the St. Louis Cardinals. His case was ultimately appealed (unsuccessfully) to SCOTUS. The legal challenge Flood brought, was against MLB team’s ‘reserve clause’. The case produced solidarity among professional baseball players in their efforts to seek free agency, which they now have.
Not advocating private sector employees return to MLB’s reserve clause…to be sure, I am not advocating that sort of contractual (employee-employer) relationship. I do find it extraordinarily interesting though, that Google’s intangible asset valuation team has assigned a specific dollar value, i.e., $1.1 billion, to approximately 2000 people without so much as engaging them in an ‘intellectual, structural, and relationship capital combine’, conducted in real time!
…the person who elects not to read has little or no advantage over the person who cannot read! (Variously attributed to Samuel Clemens, adapted by Michael D. Moberly.)
St. Louis September 25, 2017 email@example.com ‘A business intangible asset blog where attention span really matters’!