Recession Is Perfect Time To Exploit Intangible Assets

Michael D. Moberly     December 14, 2011

This lingering-sustaining business financial dilemma should, in my view, prompt management teams to initiate more discussions and strategies about utilizing-leveraging the intangible assets their company possesses and produces.  The reason; it’s time for all management teams to recognize (embrace) the economic fact – business reality that increasing percentages, as much as 65+%, of the value, sources of revenue, and ‘building blocks’ for most company’s growth today lie in – directly evolve from intangible assets, not physical (tangible) assets!

To prompt such discussions it’s necessary to:

  • not be dismissive of intangibles
  • recognize that intangible assets are not the sole province of large, multi-national Fortune 500 types of companies nor high-tech firms with intensive R&D programs and substantial portfolios of intellectual property
  • recognize that accounting/financial statements that simply ‘lump’ all intangibles into the bucket of goodwill, do not tell the whole and often times positive story about a company
  • find a new accountant if the one you are utilizing is reluctant to ‘step outside the conventional cpa box’ to discuss intangibles.

Intangible assets are integral to ‘main street’ companies, that is, the literally thousands of SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) that are proportionately rich in valuable and potential revenue bearing intangibles.

Unfortunately, while intangibles play a very significant role – contribution to both SME’s and SMM’s, just like they do in larger corporations.  But, in the former, they’re more likely to go un-acknowledged, under-valued and under-appreciated and seldom do they rise to c-suite and boardroom agendas where practices can be initiated to reap the benefits, among them being, creating value and advancing competitive advantages for a company.  

Its time that intangibles become part of today’s (financial exigency) discussions and demonstrate how they can be deployed – leveraged to become part of the solution!  In that regard, there are many reasons why the financial exigency (50,000 foot) dialogue is not being more attentive to intangible assets. 

First, intangible assets have not yet become fully embedded in the lexicon of c-suite’s, board room’s, D&O’s, and business unit management.  Fully recognizing the range of intangible assets a company has developed or acquired and their contributions to value, market share, and competitive advantages are sometimes considered a little (too) esoteric and out of mainstream mba and accounting precepts.

Second, it seems to me, we’ve become overly focused on the 50,000 perspective with far too little serious and practical attention being paid to company’s internals, i.e., intangibles.   

That’s because, in my judgment, a large segment of the myriad of proposed (fiscal, monetary) initiatives being put forth about ‘how do we extract ourselves from this lingering recession’ overlook my reality that the markets are, in many respects, super-sized intangible assets. 

That is, ‘the markets’ have been, by far, the dominant underlying theme of the financial crisis dialogue.  But, the markets exist, evolve, flourish, or diminish largely on the basis of perceptions and analysis of image, goodwill, reputation, and confidence, all of which are intangible assets!

Third, I have yet to hear any of the ‘how do we get out of this recession’ economic prognosticators mention intangibles as being a viable factor in the solution chain, especially for those so-called ‘main street SME’s and SMM’s that have virtually no expectation of receiving a ‘personalized’ bailout or temporary reprieve from their very real financial woes.   

My view is that ‘beltway’ policy advisors and decision makers pay far too much attention to devising relatively shallow, dumbed-down and focus grouped phrases and sound bites which may temporarily placate some, but soon draw the ire of ‘joe the plumbers’ and elevate the concerns of baby boomers and particularly their parents, aunts, and uncles who remember, all too well, the Great Depression and consider making a ‘run on their bank’ and putting their hard-earned savings (drawing 1% or less interest) under their mattress, as constituting very rational decision.

Perhaps, instead, we should try injecting some useful and relevant dialogue about identifying, utilizing and leveraging the oft overlooked intangible assets which can:

  • deliver more probable outcomes
  • contribute to mitigating structural barriers to intangible asset monetization and asset-backed lending to cite just a few. 

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