financial valuation
Brands
Like other intangible assets, your brand (or trademark) is an asset. Brands’ value depends heavily on the income they generate or are likely to generate. Thus the financial valuation of a brand consists of estimating the value of the economic benefits achieved by the holder. The question of the financial valuation of a brand occurs in multiple situations such as :
- The acquisition or transfer of the trademark
- Capital transactions (due diligence, contributions, assets transfers …)
- The revaluation of the purchase price (PPA)
- Strategic management of a brand portfolio
- Litigation involves assessing a prejudice related to the use of the trademark or the infringement of the brand image.
Three major methodologies can be implemented depending on the context of the operation, the nature and characteristics of the brand, and, of course, the available information :
The cost method
The cost method based on the costs of incorporation or replacement of the trademark.
The over-profits method
The over-profits method measures the contribution of the brand to the results generated by the company. The aim here is to determine, qualitatively and quantitatively, the relative strength of brand awareness and image in consumer purchasing decisions.
The royalty method
The royalty method is based on royalties for comparable brands in the same industry.
Taking advantage of the experience of its associates, Finantis Value implements a methodology, proven and compliant with the international standard for financial valuation of brands (ISO 10668:2010 completed by ISO 20671:2019), based primarily on the over-profits and proprietary tools.
We study the following points :
The legal aspects regarding the trademark
Revenue and cost structure analysis
The positioning of the brand and its notoriety
The contribution of the brand to the results, compared to other assets in the company
The quality of the protection in force
The analysis of the risks attributable to the trademark and its use
Products and services or partnerships associated with the use of the brand
At the end of our brand – or trademarks’ portfolio – valuation study, Finantis Value provides its client with a comprehensive strategic analysis report to support its operations. This report sets out the elements analyzed, our recommendations, the methods we used, and the quantified conclusions we came to. This report is a real operational tool for the strategic management of the brands.
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