Strategic Plans For Intangibles and IP Are Important To Investors and Lenders

Michael D. Moberly    August 21, 2009

Intangible assets and intellectual property are not the sole province of large, Fortune 1000 types of companies, rather they’re embedded in companies of all shapes, sizes, and industry sectors.  But, regardless of a company’s size, it’s prudent today to have a strategic plan in place that specifically describes how those assets will be utilized and protected.  Such plans are increasingly regarded by investors and lenders alike, as important signs that a strong, effective, and forward looking management team is at the helm. 

In the findings of a survey ‘Investor Attitudes on IP Protection’ (Howrey, Simon, Arnold & White, 2002) one quarter of the (lender, investor) respondents stated they actually turned down and/or discouraged investment opportunities because the applicant (company) did not have, in their judgment, an adequate approach (strategy) in place for addressing their intangibles and IP. 

In today’s extraordinarily competitive and ‘winner-take-all’ business environment, having an effective strategy for the stewardship, oversight, and management of a company’s intangibles and IP is essential.  For example, a company with a promising technology, but absent an effective intangible asset – IP utilization – protection strategy, is likely to be regarded as insufficient to warrant serious consideration from prospective investors or lenders. 

As the survey findings point out, (a.) investors/lenders do not expect companies that do not have an effective intangible asset – IP strategy in place to become a market leader, and (b.) the absence of such a strategy suggests it is unlikely that a management team will be able to fully capitalize on their intangible assets and IP, i.e., achieve the necessary success, sales, profits, and competitive advantages.

By most accounts, an effective intangible asset and IP strategy must include, at minimum:

1. a strong patent protection plan that reaches well beyond ‘patent issuances’ to justify (continued) R&D investment

2. a precise description how the intangible assets and IP will be utilized and protected relative to preserving and/or enhancing market position and reducing the probability that competitors will be able to enter that market space.

3. a demonstration of how the company’s intangibles and IP are aligned with the company’s core business

4.  a plan to effectively exploit and extract value from the intangibles and IP to the fullest extent possible, i.e., generate revenue streams, royalties, competitive advantages, and/or enhance the value of the company overall along with objective forms of measurement.

Collectively, the respondents to Howrey’s survey sent consistent messages, a primary one was that the existance, quality, and use of a company’s intangible asset – IP strategic plan contributed to their valuation of a company and to any (current, future) investment decision related to that company!


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