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BRAND VALUATION
It was the wave of brand acquisitions in the late 1980's that exposed
the hidden value in highly branded companies and brought brand valuation
to the fore. It is thus a marketing measure that reflects the security and
growth prospects of the brand and a financial measure that reflects the
earnings potential of the brand.
Generally we find that an income basis (relief from royalty) drives the
brand valuation with the other approaches to brand valuation used in support
or as sense checks. We therefore normally carry out in depth analysis into:
• market value
• brand contribution/profitability
• royalty value
• price premium
At the basis of most valuations is the question "How much more profit
will I make from buying or licensing this brand than if I were to build my
own brand?" The core technique for valuation is therefore a discounted cash
flow chart that measures estimated net present value over a specified number
of years.