Commercial DD- How do you evaluate the value of a company's brand?

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    Hannah Barber

    How do you evaluate the value of a company’s brand during commercial due diligence?


    can start with how your competitor react perhaps?



    Hi Hannah

    From my experience the value of the brand is all about what additional benefit (in the form of profit most the time time), having the brand gives, compared to not having the brand. I have found the best way of doing this is to determine what cash flows one can generate as a result of the existing business and brand, compared to what i would be able to generate if i was using my own no name brand. In most instances the difference although difficult to strip out, will give a good indication. I am in the Groceries sector, we bought a store, it performed moderately for 4 years, we changed its brand name to a well known one we own, and overnight the store performed well. Was quite an amazing case study.



    Christian Münnich

    Hi Hannah,

    you might want to use a Conjoint Analysis, using the brand as one attribute.
    Based on the part-worth utility, the resulting impact on WTP and sales volume you can derive the monetary value of the brand for a product/service.



    Majed Faraj

    Before calculating your brand’s valuation, determine what the brand includes. You should consider the value of anything that consumers associate with your brand and image, such as your trademark, brand name, visual assets such as a logo or colors, unique marketing strategy, digital assets or licenses, and level of customer loyalty.

    Brand value is an essential tool for developing your brand and forecasting the value of your business. There are multiple ways to approach the valuation of a brand, and which method you choose will depend on your business, industry, and situation.

    Either by Cost-Based Brand Valuation,
    Market-Based Brand Valuation or Income Approach to Brand Valuation


    Kar Wee Pee

    Would I be right in saying that this is usually booked as intangible asset?


    Ali Zahrani

    Hello Hannah, to value any business is always a challenge even for the business owners themselves as there are numerous factors influencing it. But in general it is a mix of science and art where three methodologies are useful in getting to the final answer:
    1. Asset based valuation
    2. Income based approach
    3. Market approach.



    the most effective method of evaluating brands should be considered the method of discounted cash flows (DCF – discounted cash flow). It is based on a direct forecast of future revenue generated by the brand

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