Monitoring Business’s Intangible Assets In Transaction Due Diligence…

Michael D. Moberly, Principal, Founder kpstrat and ‘Business Intangible Asset Blog

Monitoring and conducting due diligence on particular-targeted intangible assets in play to a transaction un-arguably, represents a (fiduciary level) obligation that directly affects outcomes.

Business’s intangible assets are often and particularly vulnerable, in part due to their non-physical nature), to arrays of temptations and risks many-of-which can materialize asymmetrically @ key stroke speeds to…

  • undermine, and/or bring suspect to assets’ (ala reputation, brand, etc.) valuation, origin, development, and application, etc., as well as,
  • erode or stifle projected competitive advantages and capability-capacity to generate revenue, etc., w/o either, being challenged, perhaps via disinformation, etc.

Experientially, that’s because, in every transaction which I am familiar, the intangible assets in play, particularly those which a prospective buyer – licensee…

  • presume to be transferrable, replicable, and re-produce-able, elsewhere, are also,
  • essential to achieving ROI to a transaction and the sustainability of a transaction outcome.

Operationally, business intangible assets, (a.) exist in various forms, contexts, and applications of intellectual, structural, and relationship capital, and (b.) in most instances, have already been introduced to and converged as components of the asset holders – seller’s operating culture, much-of-which is readily observable.

Presuming the transferability and replicability of the sought-after intangible assets (intact) will (a.) materialize comparably (post transaction) to benefit the new holders or licensee’s equally, e.g., as (b.) competitive advantage, revenue generation capability, and/or (c.) to advance the ‘value-add attractivity’ to-for a particular-product, service, reputation, brand, and/or market share…

  • warrants – obligates due diligence be conducted and monitoring of the specific intangible assets in play.

Disregard of either, both tempts and invites various entrées for risk and/or challenges to materialize, which can stifle transaction momentum, delay execution, as well as weaken – destabilize the assets projected contributions and value adds, for these reasons…

  • I encourage transaction management teams to assume an obligation to have ‘operational familiarity’ with the various collections, collaborations, and interactions of intangible assets which are in play.

Operational familiarity with business things intangible translates here, as…

  • unraveling + monitoring the origins, control, use, ownership, valuation, materiality, and transferability of the targeted (intangible) assets, and
  • how – if they are and can remain reasonably intact, transferrable, and useable.

Readers of ‘Business Intangible Asset Blog’ are respectfully encouraged to review other posts in which arrays of issues related to business things intangible are experientially researched and authentically and practically expressed.


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