Brand valuation, what’s the point?
Brand valuations are used in three main contexts, all of which can serve to demonstrate to stakeholders the significant importance of brands to a company’s profitability. a) Marketing: brand valuations can assist in the monitoring of brand value; help determine royalty rates and licensing arrangements; be an effective benchmark of return on investment (ROI); and assist in effective portfolio brand strategy and management. b) Finance: compliance with financial regulations such as US GAAP, IAS and IFRS can require the valuation of intangible assets. Valuing brands for balance sheet purposes can also strengthen the balance sheet, reduce borrowing costs and have a positive effect on the share price. Brand valuations can also help you negotiate better deals in M&A situations. c) Legal: in brand transactions or licensing disputes, a brand valuation identifies the amount of money in question and an expert witness can provide an independent, objective opinion in court to support the argument. The principles of brand valuation are also useful in forensic analysis, investigating commercial practices for legal reasons.
What information do I need for a brand valuation?
All the information needed for a brand valuation is invariably already held internally or available in the public domain. Market and consumer research is needed on the brand to be valued, competitor brands and a benchmark brand. Financial data such as turnover and profitability is a necessary ingredient together with earnings along different price points in the value chain.
What makes Intangible Business an expert in brand valuation?
Experience: we have considerable experience of valuing brands in a variety of sectors and markets for a variety of reasons. We have recently carried out brand valuations in countries throughout Africa, Asia, Europe, Latin America, North America and Oceania. Our clients, too, are wide ranging: professional services, alcoholic beverages, spirits, fashion, oil and gas, health, charities, lifestyle brands, travel brands and tobacco brands. For more information on our work, please view our case studies. People: our brand valuation consultants are either qualified marketers, accountants, or both. We also have strategic brand consultants, econometric modellers, multi-linguists, qualified US valuation consultants and advanced computer modellers – all of which have been of benefit to some of the world’s biggest brands.
Who else values brands?
Brand valuation consultants fall into two camps. Firstly, there are specialist consultancies such as Intangible Business which combine marketing and finance and use robust methodologies to produce a figure that is useful in a number of ways: such as tracking brand value; identifying and monitoring a brand’s strengths and weaknesses; defense for or against litigation action and for financial purposes such as for compliance with US GAAP or IAS. And then there are the accounting firms who approach brand valuation from a largely financial perspective. The generally accepted best practice is the duel approach (marketing & finance) which recognizes brands as a marketing investment and asset which generates profit.
How much does a brand valuation cost?
A better question might be ‘How much will a brand valuation save or make?’ If a licensing arrangement, trademark transaction or the value of another intangible asset is in dispute this could be millions. If brand valuation is used for ROI then this too could be millions. And if royalty rates are adjusted to reflect brand value more accurately, this could increase royalty payments by more than a couple percent. All projects, though, are bespoke. So the cost therefore varies for each project. If you would like a quote for a particular project, please call us on + 44 (0) 0870 240 7386 for the UK, and for the US: 001 (414) 224 0500.
Do you just value brands?
No. Intangible Business values all intangible assets and operates a range of related services. Intangible assets include copyrights, patents, goodwill and trademarks; for a full list of intangible assets click here. As well as intangible asset valuation, our services also include licensing implementation, expert witness support, forensic accounting, financial reporting, brand development and brand strategy. For a full list of available services, click here.
How do you do a brand valuation?
Essentially, a brand valuation reflects the amount the company would be prepared to pay for the brand if they didn’t already own it. This is worked out by analyzing internal and external market and consumer research on the brand, compared to a benchmark. This is then added to a model together with financial information such as profitability, discount rates and future growth rates.
