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 [email protected] 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’!

Readers are invited to explore more blog posts, position papers, video, and books at https://kpstrat.com/blog

Reader comments, as always are invited and respectfully welcome!

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