Brand Finance

Last updated
Brand Finance plc
Type plc
Industry Consultancy
Founded1996
Headquarters London, United Kingdom
Key people
David Haigh (CEO)
Services Brand Valuation
Brand Strategy
Intangible Asset Valuation
Transfer Pricing
Corporate Finance
Website www.brandfinance.com

Brand Finance is an independent branded business valuation consultancy. It advises branded organizations, or those with intangible assets, on how to maximize their value through effective management, of their brand and other intangible assets. [1] Brand Finance has been certified with ISO 10668:2010. [2] [3] As of July 2017, the company evaluates over 3,500 brands annually. [4]

Contents

History

Brand Finance was founded in 1996 by David Haigh, [5] who qualified as a Chartered Accountant with Price Waterhouse in London. Prior to setting up Brand Finance, he was the Director of Interbrand’s global brand valuation practice in London.

Brand Finance opened its first international offices in the US, Singapore and Australia in 2000, and now has a network of offices and partners in 20 countries worldwide. [6]

Methodology

ISO 10668 specifies three alternative brand valuation approaches - the Market, Cost and Income Approaches. [7] The purpose of the brand valuation, the premise or basis of value and the characteristics of the subject brand dictate which primary approach should be used to calculate its value.

For its annual league tables of the most valuable brands, Brand Finance employs a Royalty Relief methodology when calculating the value of a brand. The Royalty Relief approach is based on the assumption that if a company did not own the trademarks that it exploits, it would need to license them from a third party brand owner instead. Ownership therefore ‘relieves’ the company from paying a license fee (the royalty) for the use of the third party trademarks.

The Royalty Relief method involves estimating likely future sales, applying an appropriate royalty rate to them and then discounting estimated future, post-tax royalties, to arrive at a Net Present Value (NPV). This is held to represent the brand value. [8]

Brand Ratings

In determining the appropriate royalty rate, Brand Finance establishes a range of comparable arm's length royalty rates, and determines the point within the range that the brand under review falls by reference to a brand rating. The brand rating is calculated using Brand Finance's ßrandßeta® analysis which benchmarks the strength, risk and potential of a brand, relative to its competitors, on a scale ranging from AAA to D. It is conceptually similar to a credit rating. The data used to calculate the ratings comes from various sources including Bloomberg, annual reports, client-commissioned research and Brand Finance internal research. [9]

Brand Finance League Tables

Each year Brand Finance produces a number of Brand League tables, segmented by region or sector. [10] They launch many of these in conjunction with publications. The Brand Finance Banking 500 is published in The Banker magazine. [11]

Brandirectory

Brandirectory is an online encyclopaedia of brands where financial results, visual identities, trademark histories and the latest marketing news is to be compiled and shared. [12]

The Brand Finance Institute

The Brand Finance Institute is the education and training division of Brand Finance plc in which theoretical and practical issues surrounding brands are explored. The BFI organizes events around the world [13] featuring thinkers in the area of brand strategy, brand building and brand valuation.

Related Research Articles

In finance, discounted cash flow (DCF) analysis is a method of valuing a security, project, company, or asset using the concepts of the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management and patent valuation. It was used in industry as early as the 1700s or 1800s, widely discussed in financial economics in the 1960s, and became widely used in U.S. courts in the 1980s and 1990s.

Fundamental analysis Analysis of a businesss financial statements, health, and market

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements ; health; and competitors and markets. It also considers the overall state of the economy and factors including interest rates, production, earnings, employment, GDP, housing, manufacturing and management. There are two basic approaches that can be used: bottom up analysis and top down analysis. These terms are used to distinguish such analysis from other types of investment analysis, such as quantitative and technical.

Brand equity, in marketing, is the worth of a brand in and of itself — i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the products of well-known brands as better than those of lesser-known brands.

A royalty is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments.

Valuation (finance)

In finance, valuation is the process of determining the present value (PV) of an asset. Valuations can be done on assets or on liabilities. Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, taxable events to determine the proper tax liability.

Maybank

Malayan Banking Berhad is a Malaysian universal bank, with key operating "home markets" of Malaysia, Singapore, and Indonesia. According to the 2020 Brand Finance report, Maybank is Malaysia's most valuable bank brand, the fourth top brand in Asean and ranked 72nd in the world’s most valuable bank brands.

In finance, the terminal value of a security is the present value at a future point in time of all future cash flows when we expect stable growth rate forever. It is most often used in multi-stage discounted cash flow analysis, and allows for the limitation of cash flow projections to a several-year period; see Forecast period (finance). Forecasting results beyond such a period is impractical and exposes such projections to a variety of risks limiting their validity, primarily the great uncertainty involved in predicting industry and macroeconomic conditions beyond a few years.

HSBC Bank (Europe)

HSBC Bank plc is a British multinational banking and financial services organisation. HSBC's international network comprises around 7,500 offices in over 80 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

Kotak Mahindra Bank Limited is an Indian private sector bank headquartered in Mumbai, Maharashtra, India. It offers banking products and financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance, and wealth management. As of February 2021, it is the third largest Indian private sector bank by market capitalization, with 1600 branches & 2519 ATMs.

Interbrand advertising company

Interbrand, a division of Omnicom, is a New York-based marketing consultancy, specializing in brands and branding management. Interbrand has 24 offices in 17 countries.

Valuation using discounted cash flows is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period, together with a continuing or terminal value that represents the cash flow stream after the forecast period. In several contexts, DCF valuation is referred to as the "income approach".

Intellectual property assets such as patents are the core of many organizations and transactions related to technology. Licenses and assignments of intellectual property rights are common operations in the technology markets, as well as the use of these types of assets as loan security. These uses give rise to the growing importance of financial valuation of intellectual property, since knowing the economic value of patents is a critical factor in order to define their trading conditions.

BrandZ is a brand equity database managed by the marketing firm Millward Brown. It holds data from over 650,000 consumers and professionals across 31 countries, comparing over 23,000 brands. The database is used to estimate brand valuations, and each year since 2006, has been used to generate a list of the top 100 global brands.

Business rates in England

Business rates in England, or non-domestic rates, are a tax on the occupation of non-domestic property. Rates are a property tax with ancient roots that was formerly used to fund local services that was formalised with the Poor Law 1572 and superseded by the Poor Law of 1601. The Local Government Finance Act 1988 introduced business rates in England and Wales from 1990, repealing its immediate predecessor, the General Rate Act 1967. The act also introduced business rates in Scotland but as an amendment to the existing system, which had evolved separately to that in the rest of Great Britain. Since the establishment in 1997 of a Welsh Assembly able to pass legislation, the English and Welsh systems have been able to diverge. In 2015, business rates for Wales were devolved.

The following outline is provided as an overview of and topical guide to finance:

Intangible Asset Finance is the branch of finance that deals with intangible assets such as patents and reputation. Like other areas of finance, intangible asset finance is concerned with the interdependence of value, risk, and time.

Brand valuation is the process of estimating the total financial value of a brand. A conflict of interest exists if those who value a brand were also involved in its creation. The ISO 10668 standard specifies six key requirements for the process of valuing brands, which are transparency, validity, reliability, sufficiency, objectivity; and financial, behavioral, and legal parameters.

ISO 10668Brand valuation -- Requirements for monetary brand valuation is a specification by the International Organization for Standardization (ISO) for the procedures and methods of measuring the value of a brand. This standard was developed by ISO technical committee ISO/TC 289. ISO 10668 was published for the first time in September 2010.

A patent box is a special very low corporate tax regime used by several countries to incentivise research and development by taxing patent revenues differently from other commercial revenues. It is also known as intellectual property box regime, innovation box or IP box. Patent boxes have also been used as base erosion and profit shifting (BEPS) tools, to avoid corporate taxes.

Triple bottom line cost–benefit analysis (TBL-CBA) is an evidence-based economic method that combines cost–benefit analysis (CBA) and life-cycle cost analysis (LCCA) across the triple bottom line (TBL) to weigh costs and benefits to project stakeholders. The TBL-CBA process quantifies total net present value, return on investment, and project payback. TBL-CBA uses location-specific data to give asset owners and design professionals the flexibility and capability to provide a rigorous analysis of investment alternatives through all stages of planning and design.

References

  1. Adding Brand Value Presentation Archived April 21, 2015, at the Wayback Machine
  2. The International Organization for Standardization is an international standard-setting body composed of representatives from various national standards organizations. ISO 10668:2010 specifies requirements for procedures and methods of monetary brand value measurement.
  3. Full explanation of the ISO 10668:2010
  4. "Our Story". Brand Finance. Retrieved 10 July 2018.
  5. "Brand Finance plc: Private Company Information - Bloomberg". www.bloomberg.com. Retrieved 2018-02-01.
  6. Brand Finance Offices
  7. Brand Finance | What is the ISO 10668 | Brand Valuation Analysis | Brand Finance - Press Releases
  8. Best Global Brands | Brand Profiles & Valuations of the World’s Top Brands | Methodology
  9. 'Brand USA' Value Plummets by $1.2 Trillion Since April 2011 According to Brand... - LONDON, August 31, 2011 /PRNewswire/
  10. Tata now 41st most valuable brand in the world
  11. The Banker - Unrivalled coverage of global finance & banking - The Banker
  12. Best Global Brands | Brand Profiles & Valuations of the World’s Top Brands | Brand league tables
  13. BrandFinance Forum