Michael D. Moberly June 4, 2009
No longer is safeguarding a company’s IP, intangible assets, and proprietary know how solely about identifying and assessing ‘risks and threats’. It’s also about determining – factoring the value of those assets and their contribution to revenue, competitive advantage, and sustainability.
Why is assessing asset value useful and how does it contribute to safeguarding valuable, information-based assets? It helps management teams’ determine and prioritize (a.) what the most effective asset safeguards are, (b.) the level of (asset) stewardship and oversight necessary, and (c.) the criticality (adverse impact to a company) should specific risks – threats (to those assets) actually materialize.
Generally speaking, asset value falls into two, fairly broad, categories, e.g.,
Objective Value – the assets’ value evolves from its nature and/or context, i.e., legal documents, financial records, transaction contracts, HR records, employment contracts, etc.
Subjective Value – the assets’ value evolves from its contribution to revenue, company valuation, achieving competitive advantages and/or building – sustaining a company’s reputation, image, and goodwill, e.g., through client lists, product pricing, customer service, strategic planning, R&D, supply chains, marketing initiatives, etc.
Management teams will also find it useful, as a multiplier, to acquire a familiarity with two particular valuation methodologies to aid in identifying strategies to maximize, leverage, and extract value from the assets, e.g.,
The value-in-exchange methodology for valuing assets considers the actions of buyers, sellers, and investors and the value at which an asset would sell on a piecemeal basis. For example, IP, intangibles, or trade secrets, etc., may have multiple or stand alone value points. A written chemical formula for a new product coupled with the manufacturing processes necessary to commercialize that formula may have greater value than the chemical formula would, standing alone!
The value-in-use methodology for valuing assets considers the on-going contributions the assets make to a company. For example, assets such as IP, intangibles, and/or proprietary know how are frequently integral to a company’s current business operations, i.e., contribute to building and/or sustaining market share, competitive advantages, profits, reputation, goodwill, customer satisfaction, etc.
