A new international standard for brand valuation is set to lead to more consistent and transparent valuations.

The standard has been published by the International Organisation for Standardisation (ISO) and is known as ISO 10668. It can be downloaded from the ISO website and costs $78. It is about 10 pages long. Alex Wurzer of the Steinbeis Transfer Institute for Intellectual Property Management in Munich said that the standard does not provide a template for all brand valuations, but it has a ‘gravitational force’ that will lead to greater consistency.

“It is not a description of exactly how to create a value. The idea is to explain a kind of framework. What is a value? What kind of methodology is important?” he told Managing IP. He added that it will make valuations more transparent: “Of course we don’t know the future but we can make certain assumptions. Everyone needs to understand the assumptions behind the valuation.”

Wurzer said one of the main benefits of the new standard is that companies that commission valuations will know that, if the valuations comply with the standard, certain basic issues have been addressed, and the results will be comparable with other valuations: “The most important point is that we need trust in the values that are calculated.” He said that it was useful that the discussions on the standard, which lasted some two years, involved participants from 13 countries, and included representatives of the big accountancy firms.

Germany’s standardisation institute (DIN) was the secretariat of the project committee, and other participating countries were Austria, Bulgaria, China, Finland, France, Japan, Korea, Luxembourg, the Netherlands, Spain, Sweden and the UK. The Czech Republic, Denmark, Romania and Switzerland were observers. But the US was not involved. “The discussions were quite high-level, the was a lot of politics,” said Wurzer, who is writing a commentary on the standard to help valuers.

Stuart Whitwell of Intangible Business, who participated in the discussions on the standard, said one of the key principles is that it takes into account of consumer behaviour and legal issues, as well as financial analysis. He said that it is likely that most brand valuers will want to take account of the standard in future work: “If you don’t apply it, you could be criticised. From now on, when you do a valuation, you should be able to say it complies with the ISO.” The means, he said: “Those who commission valuations know what they can expect to get.”

Whitwell added that the standard will be particularly useful in “countries where brand valuation is still embryonic”. He added that it has already been adopted by the British Standards Institute (BSI). Wurzer told Managing IP that Germany is now working on a patent valuation standard, DIN 77100. This is due to be published in February following a meeting in November and is open for comments, though no objections have been made so far.

He added that there is also progress on developing a European patent valuation standard, based on work in Austria, France and the Netherlands as well as Germany: “The approaches are pretty harmonised.” This could in due course lead to an ISO standard for patent valuation.