by Maurice Nussenbaum, published in Contrats – Concurrence – Consommation – n°1 – January 2021 download the article
Like all assets, a brand is an asset whose value depends on the amount of income it will generate.
The scope of application includes:
- brand acquisition or disposal;
- internal restructuring;
- Purchase Price Allocation (PPA);
- specification or justification of a brand’s royalty rate;
- follow-up of strategic decisions related to the change of the brand’s value;
- compensation for damages caused to the brand’s image.
Different methods can be applied depending on the valuation context, the brand’s characteristics (recent / in-house developed / product brand, etc.) and available information:
- royalty rate method based on a market analysis;
- excess earnings method based on the results attributable to the brand (margin differential or sharing grid – see below);
- cost approach based on brand’s reproduction or replacement costs method.
Sorgem Evaluation has developed its own method based on excess earnings, including an analysis of both revenues & riskes attributable to the brand (“sharing grid”). This method brings out the link between strategic and marketing analysis and the profits directly to the brand while isolating the profits attributable to the other attributable assets of the company.
Our work includes the description and analysis of the value added related to the brand, recommendations on how to optimise the brand’s financial value, the implementation of a valuation approach allowing you to monitor the value of the brand and the distinction between the brand’s value and the value of other intangible assets.