To consistently execute lucrative and competitive business transactions parties must be familiar with intangible assets in play…not unlike other ‘experiential rich’ professions some self-described subject matter experts are often quick to exceed their operational familiarity with intangibles. Instead, they may offer overly simplistic generalizations which are wholly misleading, at best.
For example, I find it frustrating, and certainly a disservice…when a pundit speciously characterizes an under-performing business, or transaction as being the consequence of a single misstep, miscue, or oversight by business leadership. In part, that’s because my work has occasionally been construed as ‘michael claytonish’ ala ‘an intangible asset fixer’ (from the film titled ‘Michael Clayton’ played by George Clooney).
When clients describe the various services I perform on their behalf…(in the context of intangible asset strategist, risk specialist, and trainer), as ‘fixing their intangible asset circumstances’, that generally seems fitting and acceptable.
On the other hand, not infrequently, when a business undertakes – executes what may appear to a pundit…at the time, to be a particularly challenging, perhaps even a business venture-transaction fraught with risk.
But, when the same – similar transaction is reviewed by a competent and objective intangible asset strategist and risk specialist…it’s revealed that a key – underlying reason for any subsequent under-performance, transaction withdraw, or failure is variously attributable to operational – circumstantial unfamiliarity with, how, when, why, where, and which intangible assets were put in play but…
- not acted on effectively, lucratively, or competitively, or worse,
- insufficiently safeguarded, monitored, or mitigated risks.
In short, an under-performing transaction…its failure, or, one or both parties elect to ‘walk away’ is more often variously attributed to unfamiliarity with the intangible assets in play and how to conduct a pre – post (transaction) due diligence of the assets most relevant to achieving – ensuring a lucrative – sustainable, projected outcome.
To be sure, intangible asset unfamiliarity…which unfortunately, but frequently translates as the omission of intangible assets from transaction planning, execution, and due diligence. When this occurs, it often leaves the assets contributory role, value, competitiveness, and anticipated sources of revenue out of a business transaction’s ‘go, no go’ equation, and ‘off the transaction negotiating table’.
Its worth noting, the dominant drivers and ‘underwriters’…(if you will) to most every business transaction are key intangible assets which inevitably will be in play.
As such, intangibles become vulnerable to various types-levels of risk… e.g., competitive advantage under-mining, rapid erosion of (asset) value, and/or asset compromise. Any one, or multiples of such risks, can negate or substantially minimize any projected-desired outcomes to a transaction, irrespective of sector or stage of execution.
Through my experiential lens…many challenges associated with resolving business process problems and/or poorly planned-executed transactions that originate in unfamiliarity with or not recognizing key intangible assets in play can be redeemable.
Too, from numerous engagements, I have concluded…many challenges experienced by either party are variously due to intangible assets being ‘non-physical’ and therefore, outside conventional-human senses, i.e., see, hear, touch, smell, etc. Consequently, this (asset) ‘intangibility’ combined with the reality that intangible assets are seldom, if ever reported on conventional financial statements or balance sheets, somewhat understandably…
- can influence some business leaders to exhibit hesitancy and reluctance to consider intangible assets as relevant players and/or contributors to company – transaction value, competitiveness, revenue, or sustainability.
My papers featured here, coupled with my 650+ blog posts, and forthcoming book…respectfully mitigates most, if not all such reluctance and hesitancy by ensuring thorough, relevant, and practical explanations and rationales are in place to address the various contexts – circumstances in which a businesses intangible assets are in play and their contributory role and value.
It remains true, however, a percentage of business leadership are variously dismissive and under-appreciative of their businesses intangible assets… i.e., what they are, and how to utilize (exploit) them effectively lucratively, and competitively. In other words, recognizing their contributory role, value, and competitive advantages they can, and often do produce.
Not so coincidentally then, when intangible assets are treated dismissively or wholly neglected…their contributory role and value will be significantly weakened, conceded to competitors, or relegated to the non-denominational and virtually unusable ‘catch-all’ of goodwill.
Either way, I find there is no single mechanism to overcome these real and detrimental shortcomings…aside from seeking – achieving operational level familiarity with business-company specific intangible assets, over which their is control, use, ownership, and (certain fiduciary) responsibility to safeguard, exploit, and monetize.
Consistently however, practitioners that possess operational familiarity… with the various intangible assets that may be in play to a transaction or project, i.e.,
- as direct components – contributors to projected value, revenue, competitive advantages, and marketing and branding outcomes…
- also recognize – have operational insights about how intangible assets have direct bearing on company value and revenue…
- which extends well beyond merely what’s posted on conventional financial statements and balance sheets.
The position conveyed here, and throughout my books, papers, and blog posts, is that…exclusive reliance on conventional financial statements and balance sheets as strategic oracles for business operation and transaction planning, but, absent factoring essential intangible asset-related data…
- will likely lead to arbitrary, subjective, and unsystematic tracts for transaction execution.
However, with the rapid expansion of effective, competitive, and lucrative business operability…i.e., intangible asset intensity and dependency, provides credence and rationale for business leadership to recognize intangible assets’ contributory role and value, which I consistently argue are warranted.
Michael D. Moberly, April 26, 2017 St. Louis [email protected] the ‘Business Intangible Asset Blog’ since May 2006, 650+ published posts, read in 137 countries, ‘where one’s attention span, businesses intangible assets, and solutions converge’!
Readers are invited to explore more blog posts, position papers, video, and books at https://kpstrat.com/blog
Reader comments, as always are invited and respectfully welcome!