Brand valuation mandate as part of a strategic fund raising
Independent brand valuation conducted in the context of a fundraising process, aimed at determining the fair value of a premium brand as a standalone intangible asset
Description of the mandate: valuation of a European dermocosmetics brand ahead of a fundraising
The objective of the mandate was to determine the fair value of the brand as a standalone intangible asset, in order to highlight its specific contribution to the company's overall value. This brand valuation took place in the context of a strategic fundraising, where the company sought to attract investors specialised in health and wellness products.
The brand, well established in the Swiss and German markets, benefited from a premium positioning articulated around naturalness, transparency and clinical efficacy. The mandate aimed to objectify the marketing narrative through a structured financial valuation, render tangible customer perception and strengthen the credibility of the documentation presented to investors.
The analysis involved the marketing, management control and general management departments, to ensure consistency between the strategic plan, financial projections and the brand's perceived strength in its niche market.
Key challenges: translating the symbolic value of a premium brand into defensible financial valuation
The central challenge lay in the economic translation of an intangible asset deeply linked to consumer affect and trust:
- linking the symbolic value to a rigorous financial logic, respecting principles of neutrality and transparency;
- demonstrating to investors that the brand is a strategic lever for margin generation, loyalty and sustainable growth;
- ensuring harmonisation of financial assumptions with the consolidated business plan presented in the fundraising;
- complying with recognised valuation standards (IFRS 13, ISO 10668, IVS 210).
Approach and outcomes: combination of royalties, sector multiples and reconstituted costs (ISO 10668, IVS 210)
The valuation deployed a complete methodological combination:
- the income approach (royalties), based on the capitalisation of theoretical royalty flows that the company would have had to pay had it not owned the brand — a method that isolates the share of profitability directly attributable to the brand, accounting for loyalty rate, price premium and distribution channels;
- the market approach, based on a panel of recent transactions in the dermocosmetics and natural care sector, in order to identify valuation ratios applicable to brands with comparable profiles;
- the reconstituted-cost approach, retracing cumulative investments in clinical research, product design and brand communication, to consolidate consistency between perceived value and historical effort.
The results enabled the identification of an economically justifiable value range, compliant with ISO 10668 and IVS 210 standards, while illustrating the correlation between brand reputation and the company's economic performance.
Beyond the final figure, the report provided a strategic reading of intangible value: it enabled management to redefine internal brand monitoring indicators, identify unexploited value-creation levers and anchor the brand at the heart of the financial narrative presented to investors. This mandate also sensitised managers to dynamic management of intangible assets, encouraging them to track the evolution of brand value over time, in the same way as tangible assets.
Illustrative example: numerical application to a premium dermocosmetics brand
For illustrative purposes only — unrelated to the actual data of the mandate — a dermocosmetics brand generating CHF 25M in revenue with a price premium of around 20% vs generic competition could exhibit an economic value of between CHF 8M and 14M depending on the theoretical royalty rate retained (4-6%) and the attribution horizon. Cross-checked with a sector multiples approach (price/revenue ratios of 0.5x to 0.8x for premium brands) and a reconstitution of cumulative clinical R&D, marketing and brand-building costs, the methodological triangle tightens the range around a defensible median value before investors.
Summary: 3-month mandate, three approaches compliant with international brand valuation standards
Brand valuation mandate delivered over 3 months for a European dermocosmetics company in fundraising. Three approaches deployed (income/royalties, market, reconstituted costs) compliant with ISO 10668 and IVS 210 standards. Deliverable: independent report anchoring the brand at the heart of the financial narrative presented to health/wellness specialised investors.
Frequently asked questions: methods, royalty rates, ISO 10668 / IVS 210 / IFRS 13 standards
How is a brand valued financially?
A brand valuation combines three methodological approaches: the income approach (capitalisation of theoretical avoided royalties), the market approach (comparable transaction multiples) and the cost approach (reconstitution of historical investments). The cross-checking of the three produces a defensible value range consistent with ISO 10668 and IVS 210 standards.
What is the relief-from-royalty method?
The relief-from-royalty method rests on the idea that a company owning its brand avoids paying royalties to a third party. The brand value equals the discounted sum of theoretical avoided royalties, calculated based on a market royalty rate (often 2-8% of revenue depending on sector), projected revenue and a discount rate reflecting the asset-specific risk.
What standards apply (ISO 10668, IVS 210, IFRS 13)?
ISO 10668 frames the monetary valuation of brands (methods, requirements, transparency). IVS 210 (International Valuation Standards) sets the principles for intangible asset valuation. IFRS 13 defines fair value and the data hierarchy (levels 1, 2, 3). These three frameworks are jointly deployed to ensure the report's financial enforceability.
Why value the brand as part of a fundraising?
In a fundraising, brand valuation enables justifying the pre-money valuation to investors, distinguishing the brand's intrinsic value from that of other assets, and structuring the financial narrative around a differentiating asset. It strengthens the credibility of documentation and facilitates the negotiation of the issue price.
What royalty rate to apply in the dermocosmetics sector?
In the premium dermocosmetics sector, royalty rates observed on licensing transactions generally range between 3% and 7% of revenue, with dispersion linked to brand awareness, demonstrated clinical efficacy, geographic coverage and exclusivity granted. The analysis of recent comparables and the brand's scientific premium enable refinement of the rate retained.
Is this valuation reusable in other contexts?
The report produced is usable in several contexts: fundraising, M&A transactions, purchase price allocation (PPA), IFRS accounting, internal brand portfolio management. To go further on PPA: Purchase Price Allocation.
Similar mandates: other intangible asset valuations in health and consumer sectors
The transactions shown include those completed by, or with the involvement of, Hectelion team members in current or previous professional roles. They are presented for illustrative purposes only and do not imply exclusive responsibility by Hectelion.
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The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.