Overlooking – Underestimating Intangible Assets in Investing…

Michael D. Moberly, Principal, Founder, kpstrat

There is clear – convincing evidence that investors and transaction analysts are attaching more relevance to and scrutiny of how investment targets’ leadership has and is monitoring the proprietary status ala safeguards and risk mitigating to investment essential intangible assets, ala various forms and applications of intellectual, structural, and relationship capital.

Consider please, absent sustainable proprietary status of about-to-be-invested intangible assets, those assets are more likely to have been breached and/or marginalized, and less likely to deliver (projected) revenue generation capacity and competitive advantage sufficient to sustain investors’ desired ROI and exit strategy…

A not to be under-estimated driver to this pre-investment scrutiny + due diligence, as I advocate here, now, on behalf of investment outcome dependent intangible assets, emerges from…

the irreversible economic fact that today, and for the foreseeable future,

  • 80+/-% of most businesses (investments) value, sources of revenue and revenue generating capacity, sustainability, and preludes to future + additional wealth creation, are
  • thoroughly embedded, from the outset, in and evolve directly from (essentially) the same sets, applications, and collaborations of intangible assets (and perhaps IP) which most business investments, which I am familiar, are predicated, i.e., the
    • monetization – commercialization of various forms, contexts, and applications of intellectual, structural, and relationship capital, at the right time, in the right amount, and in the right way.

Absent, or the relegation of either to convention, as relevant pre + post investment obligations,

  • asymmetric risks are more likely to emerge, cascade, and undermine investment ROI projections and exit strategy, both of which are
  • premised on investment essential intangible assets remaining adequately safeguarded, i.e., not readily available in open source,
    • until (a.) pursuit of asset commercialization, and/or (b.) regulatory oversight stipulates otherwise.

For investors to assume conventional issuance of IP (intellectual property) provides a sufficient (standalone) deterrent – mitigator to intangible asset risk, is aspirational at best. Especially in globally aggressive, predatorially competitive, and technologically advanced R&D and business innovation and development, and trade environments which is now an irreversible norm.

Consider please, seldom do either manifest as sufficient and sustainable investment safeguards and outcomes…

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