When performing due diligence, it often suprises me how often a company claims to have no intellectual property or other intangible assets. However, even a company with no patents, registered trademarks or registered copyrights will have a significant amount of its value tied to intangible assets such as customer and supplier relationships, reputation, and other elements generally associated with goodwill. In my last post, I wrote about preventive actions that a company can take to help manage adverse events that can damage a company’s goodwill. In this post, I’ll discuss actions that a company can take after an adverse event — and hopefully after it took preventive actions — in order to guard against long-term harm to its brand.
At the 2007 annual meeting of the Intangible Asset Finance Society, panel discussions about brand security included many valuable tips for handling an adverse event. Suggestions included:
- Act fast. In the age of 24-hour media, instant messaging, blogs and YouTube, news of an adverse event can spread like a virus in a very short time. A company’s reaction to the event should be just as fast.
- Take responsibility. Customers will respect a company who takes responsibility for an adverse event– even if a supplier was ultimately at fault. Statements of responsibility should be reviewed in light of potential legal liability before being issued.
- Make amends. Let customers know what actions the company is taking to ensure that the adverse event won’t happen again.
- Follow up. Take internal action to address the issue. This may mean making a change in a supplier or distributor. Or, it may mean an internal personnel change.
During due diligence, intellectual property audits, or other activities where a company’s value is reviewed and risks are assessed, the review should consider whether the company can implement these steps. The company’s ability to react in a crisis will be critical to ensure the long-term integrity of the company.