‘What is brand valuation?’ is a frequently asked question. Brand valuation is the process used to calculate the value of brands. Historically, most of a company’s value was in tangible assets such as property, stock, machinery or land. This has now changed and the majority of most company’s value is in intangible assets, such as their brand name or names.
The value of brand has been recognised for over a hundred years. John Stuart, Chairman of Quaker said in about 1900, "If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trade marks, and I would fare better than you."
However, techniques to quantify brand value have become more sophisticated with the advent of computerised software such as Excel in the mid 1980s. Brand valuations hit the financial headlines when they were tabled to defend Rank Hovis McDougall (RHM) from a hostile takeover from Goodman Fielder Wattie (GFW).
Since 1988, brand valuation methods have improved and consolidated, thanks in part to their acceptance in 2005 under International Financial Reporting Standards (IFRS). IFRS stated that, for the first time, brands and other acquired intangible assets could be reported on a company’s balance sheet.
Brands are valued for many different reasons, such as for legal disputes, strategic management, internal communications, business management, brand securitisation and M&A. Brand valuation models follow standard guidelines. Models for valuing brands follow the same principles of valuation that are used for valuing other tangible assets – economic income approach, market approach and cost approach.
The application of the brand valuation models requires specialist knowledge and experience.
To request a quote for a brand valuation, simply fill in the ‘Request a Quote’ form. Alternatively, please contact us for a no obligation brand valuation consultation or ASK us a question.