Negotiating International Business Transactions

First, and foremost, let us not forget, or  overlook…the economic fact – business reality that in any negotiated transaction, intangible assets will be in play, and often are the proverbial ‘make or break’ components to a deal and its outcome.

In this regard, this post is not intended to convey disrespect to business leadership who initiate or negotiate transactions…or what intellectual, structural, and relationship capital and intellectual properties (ala intangible assets) will be in play. https://kpstrat.com/wp-admin/post.php?post=5547

My experience suggests that one, almost inevitable, outcome, to many business transactions is…by virtue of the intangible asset in play, i.e., intellectual, structural, and relationship capital, specific proprietary information will be exposed – become vulnerable, i.e., incur heightened probability, to theft, misappropriation, and/or infringement.  The criticality, i.e., potential exposures to either the buyer and/or seller, should the risks materialize, can partially, if not wholly, negate the intended (revenue, competitive advantage, synergy) objectives of the transaction.

A useful due diligence resource (starting point) insofar as proposing – negotiating – executing any business transaction with international components…is U.S. Trade Representatives’ Section 301 Reports. 

USTR ‘301 reports’ are relevant (open source) preludes…for engaging transaction due diligence on a country specific basis. Also, transaction partners-investors can examine 301’s to acquire (polite) insights into countries’ attitudes and practices about, among other things, a range of intellectual property, and thus intangible asset matters which, with certainty, will affect an outcome.

In many instances, 301’s signal a need for…further investigation or inclusion in transaction negotiation, upon which more objective – practical (transaction) risk assessments can emerge, especially for transaction partners – holders in which there are demands – necessities to share or transfer valuable, competitive advantage, and proprietary information as a requisite to consummating the transaction.

Too, a close examination of  USTR 301’s, in conjunction with…communication with the U.S. State Departments Overseas Security Advisory Council (OSAC) may reveal and/or bring necessary clarity to issues of import to transaction negotiators and the negotiation, as a whole.  https://kpstrat.com/wp-admin/post.php?post=197

Business leadership regularly involved in international transactions…have heard and/or read essentially, the same ‘headline’ many times over, wherein company leadership announce…

                      …a critical piece of this company’s intellectual property has been stolen!

To my knowledge, few, if any companies actually mandate or perhaps convey an expectation…that their leadership shall…

  • know – fully understand the distinctions and legalities of every piece of intellectual property which they hold exclusive ownership,
    • especially intellectual, structural, and relationship capital which underlie most all IP, i.e., patents, copyrights, trademarks, and trade secrets.
  • or, how specific ‘protected products’ and ‘knowledge’ are being used, shared, or transferred as part of a business transaction globally.

It does seem reasonable however, especially in light of the… 

  • economic fact that 80+% of most company’s value, sources of revenue, competitiveness, sustainability, and growth potential lie in – emerge directly from intangible assets, which intellectual properties are significant subsets.
  • globally competitive, aggressive, predatorial nature, and ‘winner-take-all’ commonalities of business transactions…
    • there is now, more than ever, compelling reasons for business leadership to seek and acquire the necessary operational level familiarity with their company’s intangible assets that will be in play – part of a transaction.
      • especially the intellectual, structural, relationship capital, i.e., knowledge and know how, upon which all intellectual properties originate and business transactions pivot.

Acquiring operational familiarity with each of the intangible in play can better position business leadership ala transaction management teams…to initiate, and serve as legitimate and valued contributors insofar as negotiating stronger, less vulnerable – risky transactions. In other words, transactions that produce measurably higher probabilities that the desired objectives within the projected time lines. Those attributes, readers, are, without exception, a good thing!

Michael D. Moberly May 18, 2018 St. Louis [email protected] ‘The Business Intangible Asset Blog’ https://kpstrat.com/blog since May 2006, where one’s attention span, intangible assets, and solutions converge!

Readers are invited to explore papers, blog posts, and books I have produced-published at https://kpstrat.com/books

 

 

 

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