The importance of carrying out IP Audits has been discussed in previous articles. This article explains the brand valuation component of IP Audits, and how brand valuations help businesses to manage risks and attract investment.
A brand valuation provides a sound and defensible estimate of what a brand is worth. The determination of brand value depends on the trademark rights or other IP rights that protect it. Trademark rights provide an insurance policy against devaluation of the brand by infringement or dilution. Furthermore, a brand valuation done while the brand is not being threatened will later help in the assessment of damages should infringement or devaluation occur. In other words, strike while the trademark is hot.
Brand valuations are part of keeping a company's IP strategy in line with its overall business strategy. For example, a company might successfully establish its brand in a number of countries, but if it overlooks registration in any of those countries, the value of the brand will be diminished by risks of depreciation or infringement. And the financial repercussions may well spread beyond the countries where registrations were overlooked.
Carrying out a brand valuation has a number of benefits. First, is the informative benefit to brand management. Once a company gains an appreciation of the actual financial value of its brand, and how that value compares to its peers, then the organization's attention is more readily mobilized to building additional value in the future. ("You can't manage what you don't measure.") Second, the data that was collected in carrying out the brand valuation will also provide essential input to brand development strategies. The information collected can be used to assess options and create a business case for change where appropriate. Finally, brand valuations play a direct role in other financial decisions, such as use as collateral or assurance in financing applications, bargaining strength in corporate sale negotiations, setting licensing fees, or quantifying appropriate intercompany royalty payments for multi-company organizations with centralized brand ownership.
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