Brand Valuation Service

Brand Valuation Service

Brand Valuation: Enterslice provides expert valuation services for brand valuation. Our valuation experts have hands-on experience in the field of valuation of tangible as well as intangible subjects. They use multiple methodologies and statistics, carefully accumulated with years of experience, for the required job and get it done efficiently and precisely. By meticulously examining the financial statistics of a business, our valuation advisors assist the stakeholders as well as additional fiduciaries in accomplishing their obligations in the most efficient routine. Our services include financial reporting and tax computation to help a business realize its future goals. In short, Enterslice is a one-stop solution for you and your business partner’s needs.

Overview of Brand Valuation

A brand is an intangible asset. Some perceive it as a name or a symbol, while others think they are just the signs of what the brand stands for, and whatever the brand stands for is its real identity. The brand is an agreement with the customer, a promise that the brand and the merchandise it names will obey all the expectations that have been shaped over a period of time. A brand subsists only because of its promise to its internal standards. Without that promise, it is nothing but just a glorified merchandise name.

Establishing the value of a brand is typically a combination of direct and indirect procedures. A direct measurement procedure is one that reaches a price because of the communication investments made for the brand. An indirect assessment will value the brand based on what it can add to the bottom line. Brands can be considered ‘works of art’. These works of art have a marketplace, but the worth at which they alter hands is not calculated automatously.

Major Methods to Calculate Brand Valuation

Cost Approach

The cost approach is a practice that involves defining an entity's value by reckoning the cost of rebuilding a comparable structure from start to completion.

Income Approach

The income approach, also recognized as the capitalization method, is a type of real estate assessment method that lets investors estimate the worth of a property based on the revenue the property produces.

Market Approach

The market approach is a technique for determining the worth of an asset based on the retail price of similar possessions. Irrespective of the type of asset, the market method studies recent transactions of similar resources.

Major Services for Brand Valuation

Calculation of NPV

NPV, or the Net Present Value, determines whether an investment, scheme, or business will be gainful down the line. The NPV of an investment is the amount of all future cash streams over the investment’s period, discounted to the current value.

Awareness valuation

In this method, our valuation expert will assess the amount of awareness required to be generated in order to attain the current level of transactions. This approach would be built on conversion simulations, i.e. taking the degree of awareness that encourages trial that further persuades regular repurchase.

Franchise Valuation

A valuation done by an expert valuer plays an imperative role in determining the worth of a franchise business. The valuation expert delivers valuable insights into your company’s financial situation and operational competence by benchmarking it alongside similar businesses in the franchise market.

Excess Earning Method

An expert valuation advisor utilises the excess earning valuation technique to evaluate the value of the company’s net palpable assets. Then, multiply that value by a fair rate of profit to calculate earnings attributable to the corporation’s tangible possessions.

Significance of Brand Valuation

Brand valuation is essential for several reasons, some of the reasons are listed below-

• Firstly, it helps businesses understand the financial worth of their brand. Knowing the worth of their brand can aid companies to make better business choices. For example, a company may use the worth of its brand to discuss better terms with contractors or attract investors. It can help businesses prioritize investment in brand-building undertakings.
• Secondly, brand valuation aids companies in calculating the efficiency of their branding initiatives. By comparing the worth of the brand before and after a marketing operation, companies can estimate the influence of their struggles on the brand’s worth. It can also help businesses identify areas where they have to emphasize their branding endeavours
• Thirdly, brand assessment can be used to recognize potential jeopardies to a brand’s value. For example, if a business operates in a highly competitive commerce, it may be in danger of losing its market stake to its challengers. By regularly appraising the brand, businesses can identify possible risks and take remedial actions to safeguard the brand’s worth.
• Does in Brand Evaluation: during yesteryears, the study related to brand valuation was restricted to two areas- Marketing estimation of brand equity and financial handling of brands.
• However, the brand valuation procedure is no longer limited to these two extents anymore. ISO (International Organization for Standardization) came up with ISO10668- Monetary Brand Valuation in 2010, which placed down principles that must be adopted when appraising any brand and are popularly monitored by most firms devoted to the valuation of brands. ISO 10668 is a meta-standard that concisely stipulates the principles to be carefully followed and the types of work to be done in any brand valuation.
• It briefly explains existing best practices and deliberately avoids detailed procedural work steps and necessities. According to ISO 10668, every brand is subjected to an examination on three levels- Legal Analysis, Financial Analysis, and Behavioral Analysis.
• Keeping in notice that the nature and idea of value are different on account of being subjective in different aspects, the above-mentioned three approaches of analysis represent the valuing of brands.

Details of Brand Analysis

Legal Analysis

The technique draws a difference between the brand, the trademarks, and the intangible belongings involved and defines them as separate matters. After the brand valuer has clearly estimated the intangible assets and (IPR) intellectual property rights comprised in the definition of the brand in concern, the valuer is obliged to assess the legal protection specified to the brand by recognizing each of the legal rights that defend it, the legal owner of every significant legal right and the legal limitations influencing destructively or positively the worth of the brand. Extensive risk breakdown and due diligence are compulsory in the legal analysis.

Behavioural Analysis

It involves accepting and forming a perception of likely stakeholder behaviour definite to geography, product, and purchaser segments where the brand is functioning. For scrutiny using this method, it is essential to understand the market extent and trends, the influence of the brand on the buying decision, the approach of all stakeholder teams to the brand, and all commercial benefits conferred on the proprietary business by the brand. Here, the brand valuer should also look into why a potential stakeholder would desire the brand in contrast to that of the competitors and the idea of brand strength, which encompasses future sales measurements, revenue, and threats.

Financial Analysis

It is the most regularly used brand valuation technique and uses four approaches- cost, commercial, market, and formulary methods. Often, a fifth method is also considered. The extraordinary situation method recognizes that, in certain instances, brand valuation can be connected to conditions that do not necessarily go along with external or inside valuation. Each instance has to be assessed on individual worth, based on how much worth the strategic buyer can excerpt from the market as a consequence of this purchase and how far of this value the seller will be capable of obtaining from this planned buyer.

Mandatory Services offered by Enterslice’s Brand Valuer

Enterslice provides best-in-class brand valuation services for you and your business needs. Some of the services included in our brand valuation service package include royalty, financial analysis, market analysis, brand analysis, legal analysis, and tax computation.

For relief from royalty, our valuation experts will determine the appropriate royalty rate and establish a growth rate, expected lifetime, and discount degree for the brand. Whereas financial breakdown is the procedure of evaluating business, schemes, budgets, and other commerce-related transactions to know their performance and appropriateness. Our valuation expert will use it to analyze whether an object is stable, solvent, liquefied, or lucrative enough to license a monetary venture. Our valuation experts will also complete a market analysis, which thoroughly assesses your business's objective market and the competitive background within a specific business. This analysis lets an industry owner project the accomplishment they can assume when they put their resources and products on the market for trade.

The brand analysis is steered at the outset of a brand procedure. When our valuation expert does this course, it will arrange the basis for the succeeding brand strategy, which builds on the outcome of the breakdown. On the other hand, for legal evaluation, our valuation expert will steer the stakeholders of a business in identifying the concerns presented and defining what laws apply to what situation and how they apply. This procedure deals with applying the corresponding law to the objectives. Lastly, for tax calculation, our valuation expert will study and analyze all the taxes valid to the brand and make an approximation about how much taxes a business needs to pay to facilitate and plan its future commercial activities.

Methodologies of Brand Valuation: Explained

As mentioned above, there are three methods mainly used for the process of brand valuation. Detailed information on the different steps taken in these methods for brand valuation are listed below:

Cost Approach

The cost-based method is the tactic more often used by our valuation experts, and this technique is mainly concerned with the cost of making or replacing the company/brand. The cost method can be further separated into the following methods

Historical or Accumulated Cost Method

In this method, our valuation expert gathers all the historical marketing charges as the value. In other words, the technique involves the previous price of creating the brand as the real brand value. It is regularly used in the initial phases of the brand as the genuine brand value. It is often utilized at the initial points of brand creation after specific commercial applications and profits cannot yet be acknowledged. However, the deficits of this method are that difficulties exist in defining what would be categorized as marketing charges and subsequent remuneration of marketing cost as a proportion of sales over the brands' predictable life. In addition to all the past development costs, this technique does not contemplate long-term investments that do not encompass cash outlay such as quality controls, particular expertise and involvement of employees, and opportunity expenses of launching the advanced products without several price premiums over challenger’s prices. The cost of making the brand might essentially have little to do with its current value. Most alternatives recommended suffer from similar shortcomings.

Replacement Cost Method

The replacement cost technique values the brand, seeing the expenses and investments necessary to substitute the brand with a fresh one that has equivalent usefulness to the company. While this technique is easy in terms of computation, it neglects the achievement of an established brand. The first brand in the marketplace has a natural benefit over the other businesses or brands as they avoid chaos, and with each new effort, the probability of accomplishment diminishes.

Usage of Conversion Model

When valuation experts use this method, they evaluate the amount of awareness required to be generated to accomplish the current sales ratios. This method would be based on conversion simulations, i.e., taking the degree of awareness that encourages trial that later induces frequent repurchase. The output produced can be used for two purposes: to determine the cost of acquiring new customers and the replacement cost of brand equity. The major flaw in this system is that the differential in the purchase patterns of a generic and a branded product is needed, and the conversion ratio between awareness and purchase is higher for an unbranded generic than the branded product, and this indicates that awareness is not a key drive of sales.

Customer Preference Method

It was estimated that the value of the brand can be calculated by observing the increase in awareness and comparing it to the corresponding increase in the market share. But later, a problem was found regarding how much of the increased market share is attributable to the brand’s awareness increase and how much to other factors. Another issue with this approach is that one cannot expect a linear function between awareness and market share.

In the alternative, another method is the recreation method, which is similar to the replacement method but involves costs involved in creating the brand again rather than simply the cost of replacement. Another distinction that exists between the two is that the value is computed through the replacement cost method, excluding obsolescent intangible assets. Another method is the residual value method, which states that the discounted residual value is obtained by subtracting the cumulative brand costs from cumulative revenues attributable to the brand.

Market Approach

The market-based approach basically deals with the amount at which a brand is sold and is related to the highest value that a willing buyer and seller are prepared to pay for an asset. This approach is most commonly used when one wishes to sell the brand and consists of methods herein stated

Market Approach

The market-based approach basically deals with the amount at which a brand is sold and is related to the highest value that a willing buyer and seller are prepared to pay for an asset. This approach is most commonly used when one wishes to sell the brand and consists of methods herein stated-

Brand Sale Comparison Method

This method involves the valuation of the brand by looking at recent transactions involving similar brands in the same industry and referring to comparable multiples. In other words, this method takes the premium that has been paid or similar brands and applies this to the company's brands. The advantage of this approach is that it looks at a third-party perspective, that is, what third party is willing to pay, and is easy to calculate. Still, the flaw in this method is that the data for comparable brands is rare. The process paid for a similar brand includes synergies and the specific objectives of the buyer, and it may not be applicable to the value of the brand at issue.

Equity Evaluation Method

Brand equity can be divided into two parts

• The demand-enhancing components included advertising and resulted in price premium profits.
• The cost advantage components are obtained due to the brand during new product introductions and through economies of scale in distribution.

Hence, the estimated value of the brand equity is found using the financial market value, and the advantage of this approach is that it is based on empirical evidence. Still, the shortfall of this approach is that it assumes a powerful state of efficient market hypothesis and that all information is included in the share price.

Residual Method

It was proposed that the valuation of a brand by means of residual value would be when the market capitalization is subtracted from the net asset value. It would be the value of the intangibles, one of which is the brand.

Another alternative approach that is suggested is that of usage of real options. The variables that need to be calculated are the risk-free interest rate, implied volatility of the underlying asset, the current exercise price, the value of the underlying asset, and the time of expiration of the option. This method is useful in calculating the potential value of line extensions, but the inherent assumptions in this approach make any practical application difficult.

Income Approach

The income or economic approach is the valuation of future net earnings directly attributable to the brand to determine the value of the brand in its current use. This method is extremely effective as it shows the future potential of a brand that the owner currently enjoys, and the value is useful when compared to the open market valuation as the owner can determine the benefit foregone by pursuing the current course of action. The income approach can be further divided into the following sections-

Royalty Relief Method

The royalty relief method is the most common in practice. It is premised on the royalty that a company would have to pay for the use of the trademark if they had to license it. The methodology that needs to be followed here is that the valuer must first determine the underlying base for the calculation, determine the appropriate royalty rate, and determine a growth rate, expected life, and discount rate for the brand. Valuers usually rely on databases that publish international royalty rates for the specific industry and the product. This investigation results in a variety and range of appropriate royalty rates, and the final royalty rate is decided after looking at the qualitative aspects of the brand, like the strength of the brand team and management. This method has an edge of being industry-specific and accepted by tax authorities, but this method loses as there are really few brands that are truly comparable, and usually, the royalty rate encompasses more than just the brand.

Differential of Price to Ratio Method

The differential price-to-ratios method calculates brand value as the difference between the estimated price-to-sale ratio for a branded company and the price-to-sale ratio for an unbranded company and multiplies it by the sales of the branded company. This method is readily available, and it is easy to conceptualize, but the drawback is that the comparable firms are a limited few, and there exists no distinction between the brand and other intangible assets, such as good customer relationships.

Price Premium Method

The Premise of the price premium approach is that a branded product should sell for a premium over a generic product. The price premium method calculates the brand value by multiplying the price differential of the branded product with respect to a generic product by the total volume of branded sales. It undertakes that the brand generates an extra benefit for consumers, for which they are eager to pay a little extra. The fault in this process is that where branded merchandise does not command a price premium, the advantage ascends from the cost and market segment.

Brand Equity based on discounted cash flow.

The problem met by this method is similar to when trying to decide the cash flows attributable to the business or the brand. From a clean finance viewpoint, it is better to use free cash streams as accounting irregularities do not influence this; cash flow is eventually the key variable in establishing the worth of any product or asset. Furthermore, discounted cash flow doesn’t sufficiently consider assets that do not yield cash flows presently. The advantage of this procedure is that it takes amplified working capital and secure asset investment into interpretation.

Brand Equity is based on Alterations in ROI, Return on Asset, and Commercial Value Added

These models are grounded on the premise that branded merchandise delivers superior proceeds; consequently, if we value the surplus returns into the future, we would stem a worth for the business or the brand. This process is easy to smear, and the information is easily available, but there is no parting between the brand and added intangible possessions and does not alter, but their instability, the earnings of the two businesses compared, counting discount rate. Other approaches also include conjoint breakdown, income split technique, brand worth based on future retributions, competitive symmetry analysis model, etc. The very statistic that there are so many approaches worth discussing below the income or financial approach shows how precise and sought-after this method is.

What is Franchise Valuation?

Franchise valuation is the procedure of estimating the market worth of all the tangible as well as intangible possessions involved in a business with numerous franchises. Franchise companies may be required to conduct a valuation of their franchise commercial for a number of motives. Whether that’s to lock a bank loan for the business or for private purposes, it is applicable for tax and estate preparation. And, of course, it is important to know the value of a franchise business or brand when observing to put it on the market. There are numerous formal and casual ways to appraise a franchise brand. A real estate agent may even offer you a drive-by approximation, or a formal valuation will provide you with an exact number of the valuation of your business/company.

Need for Franchise Valuation

Valuation figures play a pivotal part in evaluating the value of a franchise business. They provide valuable visions into your company’s financial condition and operational competence by benchmarking it alongside similar initiatives in the franchise marketplace. A complete grasp of the mechanism behind valuation figures and their significance to franchise commerce empowers a business owner to make well-informed decisions concerning divesting their business or inviting potential investors. Stay forward in the franchise business space by leveraging the power of valuation figures tailored to your commercial nuances by Enterslice.

Elements of Franchise Valuation

Book Value of Business

The book value of a business is characteristically the value of your possessions as shown on your financial declarations. Because hard possessions are depreciable, but their worth may be quite low. Real estate, structures, vehicles, and specialized commodities may have a superior value in defining the appraised worth of the franchise. Normally, book value will result in a very small figure because it does not imitate the evaluation of your franchise business as a going concern.

Sales of Comparable Business

A franchise business's second valuation component observes comparable companies' sales. Determining and catching comparable sales may be stress-free in a widespread franchise system with numerous franchisees. Numerous franchisors support franchisees with transactions of their businesses and may have evidence on comparables. Once analogous sales have been established as part of the valuation procedure, modifications will happen to account for alterations in various features like geography, commerce, the brand under surveillance, and other influences.

Value of Income Generated

The third component of franchise valuation contemplates income generated by the business. In this, expenditures, as well as devaluation and repayment, will be added back to the revenue in order to reach a realistic number. A number of extra factors need to be measured within the franchise assessment, such as the threat that is related to that particular industry, economic circumstances, and the time worth of money. The typical assessment of income range is about three to seven times the owner’s flexible income, but lower or upper values may be realized.

Advantages of Hiring a Brand Valuation Service Expert

Strategic Decision Making

By a valuation done by a valuation expert, a brand can get serious insights supporting the calculated decision-making process. By considering the value of their brand and its constituents, businesses can make well-versed choices concerning marketing approaches, brand investments, and resource distribution. It helps recognise improvement areas, enhance brand positioning, and align industry objectives with the brand’s or business’s financial value.

Investor Confidence

A valuation done by a valuation expert enhances investor confidence by clearly considering the brand's financial worth. It validates the strength of the brand and its probability of generating future income. This valuation helps appeal to potential investors, lock funding, and strengthen associations with shareholders.

Brand management and Strategy

Understanding the worth of a brand enables operative brand management. A valuation done by an expert valuer helps in developing comprehensive brand policies, identifying brand assets and flaws, and supporting marketing efforts with the brand’s financial intentions. By assessing numerous constituents of the brand, businesses can highlight investments, enhance client relationships, and distinguish themselves in the market or industry.

Risks of Not Hiring a Brand Valuation Expert

Subjectivity

Brand valuation necessitates making subjective decisions and assumptions. Aspects such as brand awareness, customer faithfulness, and brand assets can be difficult to enumerate objectively. Not hiring a valuation expert for the same will lead to having an unpredictable perspective for the procedure throughout, elevating the chances of extra doubt and subjectivity in the assessment.

Data Availability

Gathering precise and reliable statistics for brand valuation can be perplexing. Data on financial well-being, market examination, purchaser behaviour, and brand-related stats may not always be abundantly available or transparent. Inadequate data can disturb the accuracy and dependability of the valuation. Valuation specialists have access to such information for different brands; hence, it's easier for them to gain access to such attributes. Not hiring a valuation expert leads to limited data availability.

Brand Dynamics

Brands are ever-changing and can transform over a period. Factors such as market tendencies, rivalry, changes in customer preferences, and business performance can affect the worth of a brand. Valuation models must explain these dynamics and integrate forward-looking forecasts.

Contextual factors

Brand Valuation needs to reflect the industry, market circumstances, and competitive scenery. Different businesses may have distinctive characteristics and assessment approaches. The value of a brand may also differ depending on aspects such as geographic position, objective market, and legal or supervisory environment.

Other Services Offered

M&A Strategies

Brand valuation done by assessment experts plays a vital role in mergers and acquisitions. It helps both buyers and sellers determine a fair value for the brand and its associated intangible assets.

Intellectual Property Protection

It supports evaluating and protecting intellectual property assets such as trademarks, copyrights, and patents. By considering their value, businesses can take action to safeguard their (IPR) intellectual property rights.

Competitive Advantage

By evaluating various brand constituents such as customer associations, technology possessions, and goodwill, companies can identify distinct selling propositions and leverage those for a competitive advantage.

Brand Valuation for Acquisitions and Mergers

Brand Valuation delivers fair and strong sell or purchase worth for brand assets as well as flawless identification of the worth that brands add to a deal. Brand valuation measures not only the current but also the possible value of the brand possession. In many trades, the brand valuation has recognized additional worth, considerably enhancing the closing sell or purchase price. Brand valuation recognizes the value of each of the unified parties’ brands to help management in the choice of the suitable brand for the fused entity. Here are some key applications of brand valuation-

• Tax planning
• >Litigation Support
• Choice of the brand after the merger
• Licensing and Franchising, etc.

Tax Planning in Brand Valuation

Valuation accomplished for tax purposes regularly carries significant financial consequences and continues to obtain significant inspection from the courts and foreign revenue organizations. With the tests in mind, the company needs to comprehend the importance of some tax-related features when developing an impregnable tax situation. Valuation service professionals at Enterslice have wide-ranging consulting and industry knowledge in tax planning and compliance responsibilities.

Enterslice’s Tax-planning services

Purchase price allocations

Purchase Price Allocation, or PPA, is a procurement accounting process utilized to assign worth to an acquired business’s assets and obligations.

Legal Restructuring

This occurs when the variations in a company are affected by a legal alteration. This could be an alteration in ownership or legal difficulties that affect a company's union.

Property Tax valuation

Property taxes are computed by taking the mill toll and increasing it by the assessed worth of the owner’s possessions. The assessed estimates the cost worth of the property.

How Will Enterslice Help

Our team of experts has noteworthy experience with tax valuation, including legal object valuation and acquisition price allocations for tax commitments. Our prior knowledge included numerous assessments performed for both domestic and international clients. Enterslice has an extensive understanding of working with the law courts on tax valuation-related difficulties. Our valuation experts will help in subtracting worthless stocks, debt alteration, cancellation, etc. Enterslice’s team has the technical knowledge, and a strong knowledge of the tax guidelines pertinent to legal entity assessments to effectively satisfy our client's valuation needs and to support them in vigorously defending their tax situations.

Enterslice’s Asset Valuation Service

Asset valuation is the procedure of determining the fair market worth of assets using book value, outright valuation models like DCF analysis, option pricing models, or comparables. Asset valuation is a key part of finance and regularly consists of individual and objective figures. The value of a business’s fixed assets- which are also called capital assets or property plant and equipment are forthright to value based on their book value and substitution costs. However, there’s no amount on the financial declarations that tell investors precisely how much a business’s brand and intellectual property are valuable. Relative valuation proportions, such as the P/E share, help investors decide asset valuation by associating similar assets.

Valuing Tangible and Intangible Assets

Tangible assets can be categorized as either fixed assets, such as land, structure, and machinery, or as existing assets, such as cash. Intangible possessions take no physical form but still deliver a future benefit to the business. They may comprise patents, symbols, franchises, and copyrights. Enterslice provides expert valuation services for tangible and intangible assets valuation. Our experts use multiple valuation methodologies to get the fair market value of the assets.

Why choose Enterslice?

Enterslice is known for serving custom-made solutions to our clients with our expert and client-centric end-to-end support. Our expert valuation service providers will work diligently to provide accuracy in the report.

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