Elevate Investor Confidence By Ensuring Your Intangible (IP) Asset House Is In Order!

Michael D. Moberly    May 17, 2012

Want to elevate investor confidence?  Start by ensuring your intangible (IP) asset house is in order!  One consequence of management teams, c-suites, and boards of emerging growth firms not recognizing and exploiting the intangible assets their company produces and possesses is that it will have a bearing, usually adverse, relative to prospective investor’s ‘invest, don’t invest’ decision criteria.

The conventional assumption that investors are, by their nature, more accepting of risk is, in my view, much overplayed.  I have yet to meet an investor who does not have a fully developed internal ‘smell test’ to gauge a prospective transaction’s risk and return potential.  Too, I see increasing numbers of seasoned investors…

  • requiring a target’s intangible asset and IP house be in order as a requisite to investment consideration.
  • recognizing intangible assets are crucial contributors to a target’s profit potential, share price, market position, and competitive advantage.
  • assigning more weight to differentiating intangible assets from tangible (physical) assets.
  • recognizing that transaction due diligence must include pre and post components for monitoring any fluctuations in asset value, control, or ownership.

To emphasize these realities, I refer to a previous ‘Howery Survey of Investor Attitudes on IP Protection’  in which a significant number of respondents reported that companies which lack an effective IP (intangible asset) strategy has a detrimental effect on company performance.  In fact, one in four of the Howery Survey respondents reported they had actually turned down investment opportunities due to the target company’s inadequate approach to IP and other intangible assets.

Fully 95% of the Howery survey respondents report that it is no longer sufficient, in the context of their investment decision, for a target company to merely own IP with no (aligned, integrated) protection, managerial, or competitive advantage peripherals.

So, in my view, the proverbial bottom line (in conjunction with the Howery Survey’s findings) is this:

companies that presume conventional IP issuances and enforcement protections are sufficient, standing alone, to attract investors are finding instead that an increasingly important requisite to attracting and satisfying the demands of serious investors relative to their invest – don’t invest decision criteria, is the existence of comprehensive plans, practices, and procedures which…

  • demonstrate the about-to-be-purchased/invested assets, have effectively safeguarded from their inception.
  • reflect today’s increasingly aggressive, predatorial, and winner-take-all business transaction environment.
  • are seamlessly aligned with – integrated into a viable and strategically competitive business strategy that encompasses (intangible) asset development, acquisition and utilization, and exploitation.

(Adapted by Michael D. Moberly from the work of Howery, Simon, Arnold & White’s Survey Of Investor Attitudes on IP Protection)


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