What Are Intangible Assets…

Michael D. Moberly, Principal, Founder kpstrat – A Business Intangible Asset Strategy and Risk Mitigation Collaborative – Business Intangible Asset Blog: A Thoughtful – Reliable Resource for Business Leadership

Michael Porter, (formerly, Harvard Business School) described intangible assets as unique and business specific blends of activities, processes, know how, and/or customer/client relationships, etc., which companies can legitimately exploit to differentiate themselves from competitors, and create value.

 Weston Anson, (CONSOR) states intangible assets emerge and are recognized as such, from internally developed know-how that supports particular – proprietary methods, processes, best practices, as well as various ways to apply business specific information.

Dr. Baruch Lev (formerly, NYU, Stearns School of Economics) describes intangible assets as (a.) coming at the beginning of a process as ideas, (b.) at the middle of a process as patents, and (c.) at the end of a process as commercialization and distribution channels.

Apart from these more current – relevant definitions – descriptions of intangible assets, they still are frequently mis-characterized, perhaps misunderstood, and even dismissed – disregarded for their routine contributions to business valuation, competitiveness, revenue generation, and rendering business operating cultures more attractive, effective, and sustainable.

Unfortunately, as well, business things intangible are often mis-characterized, as (primarily) encompassing a business’s goodwill.  Conventionally, that may be partially correct, however, the

  • American Institute of CPA’s defines ‘goodwill’ as all-of-the intangible assets and supporting assets that contribute to ‘advantages’ that an established business has over its competitors or comparable businesses, about to be started, i.e., image, customer base, reputation, and perceptions, etc.
  • UK (my experience notes) broadly define ‘goodwill’ as the probability that a company’s customers would continue to do business with it and value its products and services above those available from competitors.

 Types – Categories of Intangible Assets

Below, I describe (with descriptive contexts and examples) expanded fields of intangible assets, rooted in my professional experiences and engagements which familiarity is encouraged.

  1. Technology – software
  • Internally developed and/or externally acquired (proprietary) software and software copyrights, including knowledge-knowhow, databases, source codes, enterprise-wide solutions, and custom applications, etc.
  1. Marketing
  • Lyrics (jingles – music) promotional characters, logos, devices, designs, photos, video, etc., associated with same.
  • Business specific newsletters, blogs, advertising/marketing concepts, and actionable insights gleaned from focus groups, etc.
  1. Engineering
  • New plant – industrial equipment designs, applications, drawings (blueprints, schematics) and related technical know-how, etc.
  1. Communications
  • With customers – clients – subscribers, etc., including methods, mailing lists, relationships, databases retrieval – application systems, special-unique distribution channels, and 1-800 numbers, etc.
  • Cable rights and/or transmission rights, FCC licenses, certification, bandwidth, etc.
  1. Competitor research
  • Actionable business – competitive intelligence which translate to plans, intentions, capabilities, etc.
  1. Real estate
  • Zoning – construction permits, air, water, and mineral drilling-exploitation rights, right-of-way, easements, and building (expansion) plans/rights, etc.
  • Location visuals, perceptions, and proximities.
  1. Personnel training
  • Proprietary development of operations, training, process – procedure manuals, etc.
  1. Website – Online
  • Domain name, website design, B2B and e-commerce capabilities, client-customer accessibility, usage, and web links, etc.
  1. Business identity
  • Corporate (trade) marks, name, and logos, etc., perhaps associated with brands, products, services, and standing.
  1. Products – services
  • Trade dress, e.g., product shapes, color schemes, and packaging design/graphics, etc.
  • Warranties, purchase orders, and/or product backlogs, etc., perhaps associated with supply – distribution chains.
  1. Contracts – agreements
  • Generally, any contract that carries a definable life and some form of exclusivity’ can be an intangible asset,g., supply, media, performance, licensing, pricing, royalty, and/or franchising agreements.
  • Advertising, construction, management, and/or service contracts, leases, operating – broadcast rights, route utilization, subscription rights, futures contracts, co-branding agreements – endorsements, spokesperson contracts, venue naming rights, etc.
  1. R&D
  • Relevant, unique, proprietarily developed – held knowledge, knowhow, processes, procedures (which perhaps could become issued IP).
  • Internal research conducted – studies, formulas, assembly data, manufacturing databases, regulatory oversight circumstances, etc.
  1. Intellectual property
  • An application – issued patent, copyright, or trademark by USPTO or foreign government, and contents therein, e.g., knowledge – knowhow related to the design – execution of a related process, method, and/or technology, including documentation, lab notebooks, formulas, and manuals, etc.
  • May include tradenames, service marks, and/or mastheads associated with a brand, product, service, process, and/or recipe, etc.
  • May extend to prior art, flankers, reprints, use-performance rights, etc.
  1. HR – employment – employees
  • Contracts, specialty business skill sets, systems, wage rates, union contracts, etc.
  • May include non-compete, non-disclosure, and confidentiality agreements, (particularly if either are transferable).

Readers are obliged to avoid taking-for-granted these types – categories of intangible asset, which in many instances, a business has developed, holds, and uses in proprietary manner.

Prudence and caution are encouraged before one (may inadvertently) dismiss or underestimate the contributory roles of business things intangible, e.g., overlook, disregard, and/or discount, or presume ‘mission essential’ intangible assets are easily replicated or readily replaceable.

For further context how these categories are treated – addressed, you are encouraged to examine kpstrat.com, videos, and posts @ Business Intangible Asset Blog.

The ‘Business Intangible Asset Blog’ is experientially researched, written, and published by Michael D. Moberly since 2006, with1100+ (long form) posts providing readers, ala business leaders, management teams, entrepreneurs, boards, and investors, et al, across sectors, with current – relevant perspectives and nuanced insights on matters related to business things intangible.

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