Regular assessments and due diligence are essential to maintaining control, use, ownership and value.
Periodic, even regular, assessments of a company’s intellectual property and intangible assets are important because those assets play increasingly important roles in a company’s value, revenue streams, future sustainability, and profitability.
Appraisals are not exercises that should only be carried out in conjunction with a merger or acquisition, or when there is suspicion of fraud, theft, infringement, or after the company is notified as a defendant in a lawsuit.
Rather, regular, even periodic, assessments of a company’s intellectual property and intangible assets are important because those assets play increasingly important roles in a company’s value, revenue streams, future sustainability, and profitability. and, as such, they are frequent targets of disputes and legal challenges. on its origin, use, control and ownership.
Respecting the economic fact, the business reality that for most companies today, more than 75% of their value, revenue streams and sustainability are directly related to intellectual property and intangible assets, assessments should not be relegated to mere confirmatory reviews of presentations, certifications, and/or renewals, etc., or intellectual property audits of ‘heated’ (generic, one-size-fits-all) versions.
A well designed and executed evaluation should provide decision makers with:
1. an objective sense: assess the fragility, stability, defense and value of assets and identify gaps-disconnections that may exist in relation to ensuring that the control, use, ownership and value of assets can be effectively sustained throughout their functional-life value cycle.
2. actionable/practical recommendations for making sound and strategic business decisions about risks: threats to those assets and practical/efficient measures to maintain their control, use, ownership and value over the duration of their life-value cycle
When conducting appraisals of intangible assets in particular, it is important to recognize that this may be a company’s (and its decision makers’) initial foray into intangible assets, so it is important for the appraiser to take on multiple and interlocking roles, that is, a teacher, analyst, protector. and business strategist:
o As a teacher – provide operational and economic clarity to the company’s intangible assets, intellectual property, proprietary know-how and competitive advantages.
o As an analyst: identify and unravel centers, groups, chains and operational complexities of intangible assets (interlocked), intellectual property, knowledge and competitive advantages.
o As a protector: identify risks, vulnerabilities and threats that increase the likelihood of asset impairment, ie threats/risks that would entangle assets in costly, time consuming and stifling (legal) disputes or challenges.
o As a business strategist: identify efficient and effective asset value preservation measures aligned with the company’s strategic business plan and/or transaction objectives, i.e., exit strategy, projected returns, and/or life cycle of the assets at stake.
For most companies, assessments: due diligence of the type addressed here should, at a minimum, be conducted to coincide with or serve as a prelude to any major business transaction (new initiative) where intangible assets, intellectual property, proprietary knowledge and/or competitive advantages will be bought, sold, transferred, bartered or otherwise entered into a deal.
One of the most important products (results) of an assessment is that it clearly conveys to business decision makers that theft, misappropriation, infringement, compromise, and/or unauthorized reproduction/use of property Intellectual, intangible assets, and know-how should no longer be characterized as mere ‘business risks’. Left unchecked and unmonitored, these risks (probabilities) quickly become unavoidable in winner-take-all, predatory, globally aggressive, hyper-competitive business environments.
