Intangible Asset Specific Due Diligence for Business Transactions

Business leadership – transaction management teams with the foresight to…conduct thorough pre – post, intangible asset-specific, due diligence recognize doing so conveys a strong tactical message to the actual – prospective (transaction) target, e.g., merger – acquisition, technology transfer, R&D partnerships-alliances, and various other buy-sell transactions.

The tactical importance and benefits accruing to a pre – posts (intangible asset specific) due diligence…lie in how the process…

• zero’s in on a targets’ ‘centers of value, competitiveness, capacity for revenue generation, brand, reputation, and sustainability’, etc..
• minimizes – mitigates the introduction of irrelevant data points which are frequently are a product of conventional – gratuitous ‘check-the-box’ transaction due diligence methods.
  • which seldom provide the level of specificity that is absolutely-
    essential for today’s go hard, go fast, go global and intangible asset intensive and dependent transactions being considered, proposed, and/or
    undertaken.
• serves as a means for monitoring a transaction in  both pre and post transaction contexts when intangible assets are in play…
  • which is critical to deal negotiation – re-negotiation insofar as (deal) value, competitiveness, sustainability, and outcome.
  • because intangible asset value, sources of – ability to generate revenue and competitive advantages can, and not infrequently do fluctuate, erode, become compromised, and/or undermined at keystroke speeds.

Of course, a requisite to conducting intangible asset specific due diligence…lie in achieving operational level familiarity with the intangible assets in play, e.g., the ability – inclination to…

• identify – distinguish, unravel, and assess the origins, fragility, stability, defensibility, and sustainability of asset’s value, revenue, and competitive advantages, which, far too often. lie ‘under-the-radar’, are overlooked, or dismissed.
• recognize how, when, where, and why (the circumstances in which) the sought after intangible assets…
  • generate value, revenue, and competitive advantages.
    may warrant (further, additional) development, more precise
    utilization, and targeted exploitation.
  • determine if, and assess any elements-components of a targets’ intangible assets and competitive advantages which are, or should have been, designated as proprietary.
• apply principles of OPSEC (Operations Security) when – if necessary to safeguard and advance a business transaction, i.e.,
  • examine steps-stages of a transaction ‘through the eyes of economic-competitive advantage adversaries’,
  • as a methodology for identifying and mitigating asset risk – vulnerability points, sustaining confidentiality, reduce probability of ‘open source’ leakages, and/or other unfavorable surprises.

• leverage transaction relevant risks – vulnerabilities to re-negotiate deal terms.

• synchronize post-investment IA safeguards – asset value preservation to reflect exit strategies, innovation – development cycles, and/or monetization initiatives.

Michael D. Moberly March 15, 2019 (revision of an April 22, 2017 post) St. Louis m.moberly@kpstrat.com the ‘Business Intangible Asset Blog’ since May 2006, 650+ published posts, read in 137 countries, ‘where one’s attention span, businesses intangible assets, and solutions converge’!

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