The value of intangible assets is the underlying connective (business) tissue…from which an objective story should emerge that describes intangibles as consistent contributors to a business’s value, its sources of revenue, competitiveness, and sustainability! https://kpstrat.com/wp-admin/post.php?post=5393&action=edit&rp4wp_parent=11660
On the other hand, there may be nothing inherently – particularly valuable about…the (physical) paper or coin currency one may have, or a bar of gold held in the Fort Knox Depository other than our collective inclination to believe that currency and/or gold has some designated value.
Such universally accepted beliefs, in large part, exist because…we know, believe, and/or assume that other people, institutions, and sellers of goods and/or serves also know, believe, and assume that currencies – bars of gold have (an agreed upon) value and that most all parties accepts it as methods of payment for the purchase of certain – specific amounts of goods and/or services.
Through the lens of this intangible asset strategist and risk specialist…intangible assets can produce substantial and consistent value for holders – business’s today, but often, only if the party developing – holding those assets can persuade prospective buyers, sellers, and/or licensee’s with some requisite precision…
- how, why, when, where, and which intangibles produce-deliver value to their holders and prospective buyers who express interest in buying, selling, or licensing those assets through a specific transaction.
See this blog’s post ‘what are intangible assets’ https://kpstrat.com/2009/04/03/what-are-intangible-assets/
An initial step is for all holders-developers of intangible assets is to…recognize that a significant (growing) percentage of the assets that will be purchased, sold, or licensed, via conventional buy-sell transactions, mergers, and/or acquisitions, etc., are intangible assets, i.e., https://kpstrat.com/wp-admin/post.php?post=5532&action=edit&rp4wp_parent=11660
- …it is an economic fact today, and for the foreseeable future, that 80+% of most company’s value, sources of revenue, sustainability, and competitive advantages lie in – emerge directly from intangible assets!
Too, the contributory roles and value intangible assets produce-deliver to…business value, competitiveness, revenues, and sustainability are often obscured…by these assets’ (a.) absence of physicality, and (b.) not knowing precisely where and how intangibles ‘fit’ on balance sheets.
Consequently, and with some frequency…their proprietary competitive advantage features often go unrecognized, undervalued, or not valued at all.
In some respects, this is what behavioral economists frequently refer to…as the ‘tinker bell effect’, i.e. the value of ‘x’ lies only in – emerges from a ‘community of belief and acceptance’. With respect to intangible assets, their value is often (still) perceived by most conventional institutions, i.e. financial services, valuation, and accounting, as being variously subjective and/or an amount subject to negotiation, sometimes in mystifying ways.
Today, it’s about building a collective story about your business in which leadership are fiduciarily obliged to…not only identify and distinguish, but articulate with clarity precisely how, why, when, where and under what circumstances key intangible assets develop to possess, produce, and deliver contributory roles to the collective value, sources of revenues, competitiveness, and sustainability of a business. That’s a very valuable and powerful business concept to be leveraged at will.
But, there remains considerable friction…within conventional institutions, systems, and education regarding the contributory role and value of (businesses) intangible assets. https://kpstrat.com/wp-admin/post.php?post=244&action=edit&rp4wp_parent=11660
The points I wish to make are…
- there is inherent ‘contributory’ roles and value which lies in – emerges from most business’s intangible assets, and
- business leadership are obliged to collectively acknowledge (identify, distinguish, and assess) that value.
- the contributory roles, value, and competitiveness a business’s key intangible assets produce – deliver to a particular-product, service, or project can, and likely will fluctuate, and thus, those assets warrant monitoring as other types-categories of intangible assets become dominant.
Insights embedded throughout this post are variously attributed to Dr. Neha Nerula, Director, Digital Currency Initiative, MIT Media Lab https://dci.mit.edu/ and her exceptional TED Talk https://www.ted.com/talks/neha_narula_the_future_of_money
Michael D. Moberly October 15, 2018 kpstrat.com St. Louis firstname.lastname@example.org ‘Business Intangible Asset Blog’ (since May 2006) https://kpstrat.com/blog where attention span, business realities, and solutions converge!
Readers are invited to explore other papers, books I have published at https://kpstrat.com/books/