Shareholders demand fair value when acquiring a new brand. Some valuation methods though lead to lofty prices. While in the interest of a seller, this not necessarily works well for the acquiring firm. Brand Value needs to be itemized and fairly measured, thereby bringing substantial facts to the negotiation table. One also would look at the Brand Value potential.
Brand Value needs to be systematically itemized and each Brand Proporty valued in terms of its real power. The current status of legal measures being in place to protect the brand plays another important role.
Looking into the long-term, many acquisition targets still have a great value potential, if their Brand Properties are used across channels, geographic regions, media, applications and target groups.
Defermination of Brand Value in mergers and acquisitions is of crucial importance. It also plays a role in contract negotiations.
Identifying Brand Value in acquisition targets
Measuring value of brand properties
Evaluating Brand Value growth opportunities
Defining negotiation strategies
Residual Value in M&A Cases
The detemination of residual Brand Value in NPV calculation is a particularly tricky one. While the lifetime of physical assets can fairly well be forecasted, it is more difficult for intelllectual (brand) properties.
The average lifetime of brands in the same product category is not a good guide as it actually is biased by the large number of unsuccessful product launches. Two other parameters are more important: (i) the history of successful brand management at the acquiring firm and (ii) the strength inherent in the brands targeted for acquisition. Other factors include changing demographies in a society. Brands that target children and young adults are particularly vulnerable to such changes. Thus, the expected lifetime is different from case to case, and also depends on the acquiring firm.
Current estimated Brand Value of the to-be-acquired brand.
Potential increase or decrease in future Brand Value due to different channel management and potential of acquiring firm.
Potential increase or decrease in future Brand Value due to different brand management skills at the acquiring firm.
Residual value in NPV calculation.
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