Intangible Asset Value: How Long Can Value Be Sustained…?

Michael D. Moberly   November 16, 2009

Intangible asset value; how long can it be sustained?  Three points to consider.  First, unfortunately for management teams and boards, the answer to the question is its not indeterminate!  Second, in today’s globally predatorial business (transaction) environment, risks/threats to intangible assets, e.g., the capability of economic-competitive advantage adversary’s to execute strategies to erode and undermine another company’s asset value, are persistant and assymetric.  Third, 65+% of most company’s value lie in – are directly related to intangible assets and intellectual property.

In their Deloitte report titled, ‘The Economic Role of Intellectual Property’ (Noonan Haque and Greg Smith) identify/describe the ‘key issues’ knowledge-based company’s confront as being, (1.) rapid R&D breakthroughs, (2.) diffusion of knowledge, information, and data, and (3.) increasingly abbreviated asset lifecyles.  An assets’ life (value, function) cycle can of course, be influenced by a range of factors. 

Consequently, a worthy exercise for management teams and boards to engage today, is to devote time to examining and understanding the variety of intangible assets being produced (by their company) and reach consensus on the asset value protection-preservation-maximization strategy (model) that best fits their company, their sector, their innovation, and their core business goals.  One objective is to put in place a viable strategy to practice effective and consistent management, stewardship, and oversight of those assets to strenghten and lengthen their respective life-value-function cycles.

Other practical and immediately useable products of this exercise will be (a.) determining how to monitor (asset) value and materiality, and (b.) ensuring the production and utilization of the company’s (intangible, IP) assets are effectively aligned with the company’s core mission.

Those engaged in business (IP, intangible asset) management who are unfamiliar with this position or dismiss its relevance are certainly doing a disservice to their company and/or client!

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