Intangible Asset Business Valuations…

 Michael D. Moberly    October 23, 2012

In the coming week, I will engage in business travel to a major city with an SMSA population well north of 4 million.  Even though my business meeting card is already full, as usual I will make a concerted effort to identify firms and strategists in the area who, based on language I find in their website, convey a shared interest in safeguarding and monitoring the stability, sustainability, and value of their clients’ intangible assets vs. merely conducting, what I frustratingly describe as subjective glimpses and/or ‘snap-shots-in-time’ (business) valuations.

My rationale is, unless and until the legitimate originators and/or holders of intangible assets recognize the importance of, and possess the interest and where-with-all to, sustain control, use, ownership, and monitor the value and materiality of their (key) intangible assets, all else may be for naught, because asset value can ‘quickly go to zero’!

In this context, I am often amazed with individuals and/or companies that seek business – intangible asset valuation services, that exhibit – express little or no appreciation for the business reality that most intangibles are routinely and persistently vulnerable to – targets of an array of asymmetric global threats and risks, not the least of which are misappropriation and infringement.  When such risks-threats materialize, they can produce almost instantaneous (value, competitive advantage) loss, erosion, dilution, and undermining, etc.  In other words, if one can’t consistently practice effective (intangible) asset oversight, it’s no longer proper to characterize asset risks – threats as probabilities, rather inevitabilities!

Of course, an unknown percentage of these risks – threats are attributed to accidental or inadvertent acts or behaviors, largely by employees or contractors, while others, most in my view, are products of specific acts/events emanating from a growing global cadre of ultra-sophisticated and predatorial ‘legacy free’ players who consistently and effectively target, not necessarily a company’s intellectual properties, rather its knowhow, i.e., intellectual, relationship, and structural capital, which are, in my judgment, are the most consistent and substantive contributors to a company’s value, its sources of revenue, and ‘building blocks’ for (future) growth, sustainability, and profitability!

Again, most business (intangible asset) valuations are subjective glimpses and/or snap-shots-in-time.  Unless and until the holders of intangibles can demonstrate they have effective practices, procedures, and culture in place to sustain control, use, ownership, and monitor their assets’ value and materiality, little else matters in my view.  Arguably then, business valuations will remain mere ‘snap shots’ that prospective buyers should give less credence unless, that is, they are satisfied asset stability, durability, sustainability, resilience, and longevity have been properly factored.

Should this level of awareness and understanding rise to being periodic, if not consistent agenda items in management team  – c-suite (board room) meetings, we’ll know something good and right has occurred!

Comments regarding my blog posts are encouraged and respected. Should any reader elect to utilize all or a portion of this post, attribution is expected and always appreciated. While visiting my blog readers are encouraged to browse other topics (posts) which may be relevant to their circumstance. And, I always welcome your inquiry at 314-440-3593 or [email protected]

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