Valuation : Question 15
What valuation methods are used for valuing a brand/business in the consumer goods segment?
A brand is only of interest from a financial point of view if it enables the owner to sell its branded products at a higher price and to improve customer loyalty.
Accordingly, you have to estimate this price difference and then deduct all brand-related costs (advertising, higher manufacturing costs due to better quality product, specialised sales force, etc.). Next you deduct tax and then discount the balance over the expected life of the brand at the cost of capital. For more information, see chapter 31 of the Vernimmen.
Accordingly, you have to estimate this price difference and then deduct all brand-related costs (advertising, higher manufacturing costs due to better quality product, specialised sales force, etc.). Next you deduct tax and then discount the balance over the expected life of the brand at the cost of capital. For more information, see chapter 31 of the Vernimmen.