Brand valuation
Brand Valuation
index
What is a brand?
The power of a brand is reflected in his impact on the minds of consumers and is easy to remember because the brand summarizes the concept of the company, lthe evaluators of brands internationals believe that "a brand is not only an identification of product, but also a tool of protection legal", por Therefore, the evaluation of this is very important.
The World Intellectual Property Organization (Mexican Property Institute Industrial) define a mark like “a name, expression, symbol or design, or a combination of both, intended for identify the goods and services of a merchant or group of merchants, allowing the competence between competitors.
The brands are part of the intangible assets; Intangible assets are things that lack of material.
What is brand valuation used for?
Currently, the brand as an intangible asset is one of the assets more important of a company, at the same time of other assets fixed assets such as machinery, premises, warehouses, etc. for do business, however, accounting regulations current currently does not allow the registration of intangible assets created in companies that exceed their cost (except for projects of Investigation and development).
In this case, HE has taking into account the International Financial Reporting Standard 3 (“IFRS 3"), that demands that one person who buys a business assigns the price of buys through the recognition of assets, including the assets do not previously registered and the Passives assumed are calculated to its fair value at the time of the take the control.
This International Standard defines that “an asset is a resource controlled by an entity as a result of past events that are expected to produce future economic benefits”, such as the sale of a product or service, cost savings or other economic benefits derived from it. for the acquisition of assets.
The Financial Reporting Standard C-8 defines intangible assets as follows way: «Intangible assets refer to non-monetary assets identifiable no they have a shape physics and can generate future economic benefits that are controlled by an entity".
The intangible assets are recognize as high assets value, and the further valuable but less known of these can be the brands.
The brand is part of the classification of intangible assets in the classification of marketing.
ISO10668 defines the value of a brand as: “The monetary value of a brand represents the economic benefit that said brand produces during its expected useful economic life.”
Factors to value a brand:
- Probability of entry of competing brands.
- Brand distinctive (probability of being cancelled).
- Brand protection (Property Registry).
- Brand strength.
- Brand reputation.
- Development or Incorporation Sector
What characteristics does the brand appraisal have?
Nowadays, the the importance of the brands is increasingly pronounced, and the valuation has become a of the areas more interesting for appraisers, because in the brands, their value is determined In large measured by consumers, can say that the worth of the brand is reflected in the mind of the consumers.
How is a brand valued?
It is important determine exactly what technique either method of valuation is the further appropriate, when there is enough information and data for estimate the fair market value of the brand , as evaluators, we need maximize the use of supplies more observable and relevant, since the purpose of using he method of assessment is to estimate the value reasonable of ordered sales of assets between market participants during he period in which evaluate the conditions current market conditions, likewise, the evaluator will determine the most appropriate method for any other end.
IFRS identifies three methods of assessment commonly used: the method of market, the method of cost and the method of income. Also establishes that the entity will measure fair value using a method of assessment that is consistent with one or more of these methods, you should use the trial for determine if the value fair of the brand can determine with reasonable certainty for each of the methods described above.
For example, We can use the market approach if there is an observable market to sell and buy brands comparable, however, If the observability of this data set is deficient and there is not enough comparable data in it market, should be consider the other two approaches, lor the same happens with the income approach and expenses, pFor the income approach, it will be important calculate Financial statements of the company and use the method of assessment further reliable, this form, will be adopted as a unit of assessment the norm and method of assessment further appropriate in relation to the situation in That divulge the brand or the right to property intellectual.
What methods are used in brand valuation?
COST APPROACH
Based on factors such as: Cost of the graphic designer. Salaries of the people who participate in providing ideas for the name. Advertising expenses. Marketing expenses
MARKET FOCUS
To carry out this method it is necessary to know the value of brands similar to the one being evaluated. Here, the appraiser carries out market research to obtain the closest fair value, the accuracy of which will depend on the size of the sample to be analyzed. To do this, it is necessary to have information that allows us to know how many times a brand that is part of a valuable brand has been cited in a period of time.
INCOME FOCUS
This approach is characterized by projecting the value of the brand into the future. Cash flow (which must be verified throughout the year) and goodwill must be considered here, to calculate this the accounts for the last five years and the audit must be presented, accounts showing the company brand billing amounts.
Why is it necessary to carry out a brand valuation?
- Sell a product at a higher price or increase sales volume.
- Helps define the corporate mission.
- It gives a more accurate view of the company's value.
- It is the basis of a buying or selling process.
- Improves negotiation with financial entities.
- Used as collateral for loans.
- Capturing it in financial statements by increasing the company's capital.
- Tax Deduction Benefit
Today, intangible assets constitute a large part of companies' assets, so it is increasingly important to evaluate their value.
ANEPSA GLOBAL
With Anepsa Global it is possible for this and other types of appraisals to be carried out, contact us by leaving your information or sending a message through our social networks, we are here to provide you with advice and guide you so that you know what type of appraisal is best for you.
