Brand Valuations

"If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you."— John Stuart, Chairman of Quaker

Brand has come a long way from the time when it was first thought that the brand was just another word for Logo. It is widely appreciated that brand is one of the most valuable assets an organisation owns. This is because of the economic impact that brands have. Brand influence the choices of customers, employees, investors and government authorities. A study concluded that on average brands account for more than one-third of shareholder value. The study reveals that brands create significant value either as consumer or corporate brands or as a combination of both.

Mr. Maneesh Srivastava
Sr. Manager
+919871026040
maneesh@indiacp.com

NEED OF BRAND VALUATION

A brand can be valued anytime and for many reasons, that includes- Brandstrategy, Financial Reporting, Mergers and acquisitions, value reporting, licensing, legal transaction, accounting, strategic planning, management information, taxation planning and compliance, liquidation.

Several studies have tried to estimate the contribution that brands make to shareholder value on an average brands account for more than one-third of shareholder value. The study reveals that brands create significant value either as consumer or corporate brands or as a combination of both.

Below is the whole article which you can read or download:

SUM OF THE PARTS (SoTP) VALUATION

“Company A is doing Sugar Business with Value of Say Rs 100 and company B is doing Cement Business with Value of say again Rs. 100 then what should be the value of company C doing both the above business by itself, On unitary basis it should be Rs 200."

In terms of Schedule 1 of the Notification, an Indian company may issue equity shares/compulsorily convertible preference shares and compulsorily convertible debentures (equity instruments) to a person resident outside India under the FDI policy, subject to inter alia, compliance with the pricing guidelines. The price/ conversion formula of convertible capital instruments is also require to be determined upfront at the time of issue of the instruments.

Value of C company = Value of A company + Value of B company

ENTERPRISE VALUE : THE MARKET VALUE OF THE WHOLE BUSINESS?

Enterprise value (EV) is an economic measure which reflects the market value of a whole business. It is a sum of claims of all the security-holders: debt holders, preferred shareholders, minority shareholders, common equity holders, and others. Enterprise value is one of the fundamental metrics used in business valuation, financial modelling, accounting, portfolio analysis, etc.

EV= Market value of Equity + Market value of Debt + Minority Interest at Market Value + Preferred Equity at Market Value – Cash & Cash Equivalent + Market Value of Non Operating Assets