Theranous: Investor Receptivity to Due Diligence…

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

As a business intangible asset strategist and risk mitigator, I encourage readers to consider a consequential ‘takeaway’ to the Theranos (health-tech company’s) charges, investigations, depositions, at-trial testimonies, verdict, and the sentencing of its founder, Elizabeth Holmes, reflects an unfamiliarity, unreceptivity, and hesitancy to…

  • consider + conduct due diligence on specific intangible assets in play, especially those to be invested.

Business transaction specific intangible asset due diligence applies objective, measurable, experiential, and analytical methodologies to aid investors being good-better-best positioned to recognize, differentiate, verify, and assess ‘mission essential’ intangible assets insofar as their

  • origins, reliability, resilience, and sustainability to deliver competitive advantage, valuation, and ROI.

Elizabeth Holmes’s (and allies @ Theranos) engaged in a series of lies and ‘fake it till you make it’ misrepresentations from the earliest stages of the company’s development wherein investment was needed and sought.

Each misrepresentation – falsehood uniquely advanced the big claim that Theranos’ new technology

  • could analyze over 200 health issues, hence worthy of and warranting investment.
  • would revolutionize the practice of taking diagnostic blood samples, via a simple pin prick, linked to ‘the Edison’ (Theranos’ flagship product).

Subsequent investigation revealed, among other things, that Theranos had neither developed, nor did they hold, new or functioning technology as claimed, ala ‘the Edison’ a supposed revolutionary blood analyzer.

Un-remarkably – un-surprisingly, numerous investors in Thernos, constituted a soon-to-be-embarrassed ‘who’s who’, who presumably concluded – were advised ‘it was a sure thing’ and therefore were un-receptive to pausing their enthusiasm and/or withholding invest – don’t invest decisions to…

  1. plan – demand – seek – execute intangible asset specific due diligence, and
  2. ensure same, at minimum, includes pre – post investment analysis of the intangible assets in play as a requisite.

It may be enlightening to recognize that numerous – early advocates of – investors in Theranous hold un-questioned experience in recognizing, distinguishing, and avoiding being inadvertently drawn into agenda driven – unverified public pronouncements (hype) from potentially unscrupulous sources.

As readers recognize, the above represent a professional expectations, obligations, and reputation risk – safeguard necessities, today and going forward.

Universal economic facts and business development + operation realities (across sectors) clearly recognize that…

  • 70+% of most business’s valuation, competitiveness, and revenue generation capability-capacity (irrespective of sector, stage, location, etc.) lie in – emerge directly from intangible (non-physical) assets,
  • primarily in various forms, contexts, and applications of intellectual, structural, and relationship capital,
  • introduced in the right way, at the right time, at the right cost, i.e., competitively, lucratively, and sustainably to among other things, mitigate – minimize potential challenges, risks, and/or misinformation, etc., which can stifle momentum and undermine asset valuation.

Intangible asset-specific due diligence is a powerful product – outcome to reveal, unravel, and demonstrate origins, ownership, resilience, transferability, and sustainability.

Numerous individuals whom I am familiar, appear to have (internal) antennae and deterrents (ala experiential – internal due diligence) to assess proposals, ventures, and circumstances (ideological, political, financial, etc.) in which ‘slight hints’ of being too good to be true can be sensed, avoided, and/or mitigated.

More soon on this topic…please read and comment.

The ‘Business Intangible Asset Blog’ is experientially researched, written, and produced by Michael D. Moberly (since 2006, over 1000 long form posts) to provide readers (business leaders, management teams, boards, and investors) with reliable perspectives and nuanced insights to distinguish, value, and safeguard particular-business things intangible designated as mission essential. 

Readers of this, and other posts, @ Business Intangible Asset Blog’ are-encouraged to offer comments.

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