How to calculate the value of a brand?
The emergence of intangible values
The dematerialized or digital economy has changed the paradigms for calculating the value of a company and/or its brand.
The tipping point on a global scale will have been Facebook's takeover of WhatsApp - the amount of this takeover is based on the intangible values of brand and data and not turnover, Ebit, or R.O.I.
Thus, the brand has become the object of all financial, legal and marketing attention as a "capitalizer" of future results.
Delors, whether it is a sale, a recapitalization, a bank loan, the value of the brand is to be taken into consideration.
It is important to state:
That the financial value of the trademark can only be talked about if it is duly registered with an official trademark registration body, for Switzerland this is the IGE - Institut Fédéral de la Propriété Intellectuelle (Federal Institute of Intellectual Property) for France with the INPI.
A trademark is registered by
→ product class - depending on your business
→ country or group of countries, EU mark, international mark.
The mere fact of being registered in a trade register does not give the trademark legal protection.
The 1stst standard dedicated to the financial evaluation of the brand is the ISO 10668 standard
What this definition does not specifically state in terms of valuation is that the brand is linked to its Data.
The value of "WhatsApp" is the nearly 2 billion users and their phone numbers.
The 3 values of brand evaluation
1. Justified value
- Financial result/Ebitda
- Value of assets
(patents, building, trade mark)
2. Probable justified value
Adds intangible values
Brand/patent + data
- Cognitive value of the brand
- Market segment potential of the brand/patent
- Copyright / know-how
- Value/valuation of Data
- Compliance / regulation
This method of valuation, inspired by the evaluation of mineral resources, gives an overview of the current capacity and development of a brand - just like for a real estate property - is included in the evaluation the existing and the potential developments.
3. Potential Probable Justified Value
- Development of other product classes
- Territorial development
- Potential brand/patents
The calculation of the brand value according to the context is based on these 3 parameters.
Things to remember
The value of your company includes the value of its brand and its Data, whether that brand is global or local. Therefore, take care of your brand, its sustainability values and its visibility.
Company Staging - a service of Swiss House of Brands
Prepare your business for sale by revaluing your intangible asset, the brand→ increase the value of your business - on average 30% more for SMEs
- Audit of the brand and its potential markets
- Update / modernization of the cognitive brand (positioning, visibility)
- Potential opening of market segments - development potential
- Valuation of Data
Case handled by our firm:
A fiduciary in French-speaking Switzerland whose founder wanted to retire and could not find a buyer.
- The analysis of its clientele showed that the majority of its clients were active in the legal field
- The brand has been repositioned on this specificity
- An international software company for lawyers has bought the brand of our trustee.