Brand Finance

Brand Finance plc

Type	plc
Industry	Consultancy
Founded	1996
Headquarters	London, UK
Key people	David Haigh (CEO)
Services	Brand Valuation Brand Strategy Intangible Asset Valuation Transfer Pricing Corporate Finance
Website	www.brandfinance.com

Brand Finance is a branded business valuation consultancy. It advises branded organisations, or those with intangible assets, on how to maximise 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]

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.

References