Brand valuation

Question 1

What is valued in a brand valuation?

Answer 1

. “Trademark Valuations” - A name, a logo
and other associated visual elements

2. “Brand Valuation” - A broader scope of elements including name, logo, other verbal and visual elements, and associated intellectual property rights
3. “Branded business” - A holistic company or organizational brand

Question 2

Give examples of three valuations approaches for brands

Answer 2

• Cost approach
• Market Approach
• Income Approach

Question 3

Explain the most important valuation method for brands, the income approach

Answer 3

Valuing a brand on the basis of what it contributes to revenues and earnings discounted back to a NPV

Example methods:
• Price premium or Volume premium
• Royalty relief (mixed market/income)

Measures value by reference to the economic benefits expected to be received over the remaining useful economic life of the brand
• Takes into account future of the brand
• Relatively easy to find good numbers as a basis for the
valuation
• A large number of methods make it suitable for different valuation purposes

But:
- Requires insight into importance of brand - not all branded products have unbranded equivalents that permit a comparison
• Discount rate and future earnings can be difficult to estimate
• Many different models with individual disadvantages such as finding comparables to derive data from, determining royalty rates, “black box” algorithms etc.

Question 4

What is important to think about when doing a brand valuation?

Answer 4

1. What is it that is being valued?
2. What is the purpose of the valuation?
3. What valuation approach to use?
   – Challenges with different approaches