Understanding your brand’s value allows companies to tap into intangible advantages, shape strategic decisions, and maximize long-term growth. In this article we share 5 common examples of brand valuation requests.
Brand value initially refers to the perceived value of a brand in the minds of customers, employees, and stakeholders. It encompasses the emotional and psychological connections people might have with the brand, and how much they are willing to pay for its products or services. A strong brand value can lead to higher customer loyalty, premium pricing, and an easier entry into new markets.
Brand valuation, on the other hand, is the process of quantifying a brand’s financial value. It is a formal assessment that assigns a monetary figure to the brand's name, or symbol or logo.
Methods such as
are commonly used to determine how much a brand is worth in financial terms. They are used to help understand the economic standing of a brand in the marketplace.
Unlike the most commonly used methods, which are primarily developed from an accounting perspective as part of business valuations, we use a method developed from the perspective of branding and brand management. We call this the Isolated Brand Valuation method©.
Find out more about the differences between the most commonly used brand valuation methods.
Why would a company or entrepreneur want to know the value of a brand? We give you five most common examples:
Case: A departing restaurant owner does not want the restaurant's brand name to be continued. The other co-owner, who wants to keep operating the restaurant under the same name, is willing to settle this demand financially. To determine the amount for this buyout, a brand valuation is needed. The result of this valuation can help establish a well-founded buyout amount.
Case: When a company is declared bankrupt, the value of its assets is still assessed. A brand, especially one that is strong and has built a good reputation, also holds value. However, this value is often still determined to be … nothing! By calculating the value of a brand, one can better understand the (residual) value that can be attributed to it.
Case: Sometimes, after multiple acquisitions, the platform company is stuck with multiple brands. Questions that may arise are 'what to do with the brands: merge them to one, or keep them as is?', or 'is one or more brands appropriate to continue as a proposition?' In these cases, brand value assessment is essential in order to make a well-founded choice.
Case: Business owners are always looking for opportunities to expand or to grow their business. Often, additional investments are needed, but how do you secure a substantial amount? To secure a loan, collateral is always required, depending on the amount to be borrowed. A brand can serve as such collateral, provided it is correctly valued and validated.
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