Brand Valuation: Approaches, Methods, and evaluations

Introduction: The Brand as a Strategic Asset at the Heart of Value Creation

Today, the brand constitutes one of the most powerful—and paradoxically most misunderstood—assets in the contemporary economy. In many sectors, whether luxury, consumer goods, software, healthcare, or professional services, a company’s value no longer resides solely in its tangible assets or production capabilities, but in its ability to build a lasting preference with its customers. This preference has a name: the brand.

Yet, the brand is still too often reduced to its graphic or symbolic dimension. In reality, it has a dual nature. From a legal perspective, it constitutes a protected distinctive sign, allowing for the identification and differentiation of a company’s products or services. In French law, Article L711-1 of the Intellectual Property Code defines it as a sign used to distinguish the goods or services of a natural or legal person. In Switzerland, Article 1 of the Federal Act on the Protection of Trade Marks and Indications of Source (TmPA, SR 232.11) adopts a similar definition, specifying that it is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. The brand is, therefore, first and foremost a right, enforceable against third parties, delimited by registration, classes, and a territorial scope.

But the brand is also an economic asset. Once it is identifiable, controlled, and capable of generating future economic benefits, it falls within the scope of intangible assets as defined by the IAS 38 standard published by the International Accounting Standards Board. It is no longer limited to legal protection: it becomes a vector for future cash flows.

The central idea is then simple, yet demanding: a brand is worth something if, and only if, it generates excess returns. These returns can take various forms—the ability to command a premium price, increased loyalty, reduced customer acquisition costs, increased volumes, or competitive resilience—but they must, ultimately, translate into measurable economic flows. This approach aligns with the fundamental logic of corporate finance: the value of an asset corresponds to the discounted value of the cash flows it is capable of producing.

The difficulty, therefore, does not lie in the claim that a brand "has value." It lies in transforming a multidimensional reality—legal, marketing, strategic, and economic—into a quantified, consistent, and defensible value. How do we isolate the brand's specific contribution within a business model? How do we distinguish what belongs to the product, technology, distribution network, or management? How do we integrate legal protection, brand awareness, and competitive positioning into a financial discounting framework?

The central problem can thus be formulated as follows:How can we evaluate the value of a brand in a rigorous and methodologically sound manner by articulating its legal foundation, its economic capacity, and recognized corporate finance standards?

The stakes go beyond simple accounting estimation. It concerns mergers and acquisitions (M&A), purchase price allocation, licensing agreements, intra-group restructurings, litigation, impairment tests, and transfer pricing issues. In each of these contexts, the brand ceases to be an abstract concept: it becomes an asset whose value must be demonstrated.

This article proposes a structured analysis of brand valuation. After recalling the origin and evolution of their recognition as intangible assets, we will examine their legal and financial definition in French and Swiss law. We will then analyze the contexts justifying their evaluation, before detailing the three main recognized methodological approaches—cost, market, and income—with a particular focus on the Relief from Royalty method. A numerical example will illustrate the construction of value, supplemented by an indicative table of sectoral royalty rates. Finally, a strategic synthesis will put into perspective the contemporary challenges related to measuring brand value.

The objective is two-fold: to clarify the conceptual framework of brand valuation and to demonstrate, from an applied finance perspective, that the brand constitutes a measurable, structurable, and defensible asset—provided that its legal foundations and economic mechanisms are understood.

Origin of Brand Valuation: From Legal Protection to Financial Recognition

Brand valuation did not immediately emerge as an autonomous discipline. It is the result of a progressive evolution at the intersection of intellectual property law, accounting, and corporate finance. Originally, the brand was essentially viewed through a legal lens: a distinctive sign to identify the commercial origin of a product or service and to protect its exploitation. Its primary function was to avoid confusion and ensure competitive loyalty.

Historically, trademark protection was structured in Europe in the 19th century, in parallel with industrialization and the expansion of trade. In France, the first major modern law dates back to 1857. In Switzerland, federal trademark protection appeared at the end of the 19th century, before being recast into the Federal Act on the Protection of Trade Marks and Indications of Source (TmPA, SR 232.11). The brand thus became an exclusive right, transferable and enforceable against third parties. This transferability constitutes a fundamental point: it paved the way for its recognition as an asset that can be sold, contributed, or licensed.

However, for a long time, the economic value of brands remained implicit. It materialized mainly through goodwill during acquisitions. The price paid exceeding the book value of tangible assets was often justified by reputation, customer base, or awareness—without a precise distinction being made between these components.

The turning point occurred with the rise of international accounting standards from the 1990s and 2000s. The globalization of financial markets imposed greater transparency in purchase price allocation. Business combinations could no longer settle for global and indistinct goodwill. Identifiable intangible assets had to be isolated and valued separately.

It is in this context that IFRS standards played a decisive role. The IAS 38 standard relating to intangible assets defines the criteria for identification, control, and future economic benefits. The IFRS 3 standard on business combinations requires, during an acquisition, the separate recognition of identifiable intangible assets, explicitly including brands and trade names. These texts are published by the International Accounting Standards Board and currently constitute the international reference for the accounting recognition of intangible assets.

This evolution marks a major conceptual break: the brand is no longer just an element of reputation integrated into global goodwill, but a distinct asset, capable of being valued individually.

In parallel, international tax practices reinforce this requirement for autonomous valuation. The OECD Transfer Pricing Guidelines dedicate a specific chapter to intangible assets and reiterate that intra-group transactions involving these assets must respect the arm’s length principle. A brand exploited by a subsidiary must therefore be subject to remuneration consistent with what an independent third party would have required. This logic contributes significantly to the formalization of brand valuation methods.

Furthermore, the rise of knowledge-based economies further accentuates the phenomenon. Studies conducted on the composition of the market value of listed companies show a constant increase in the weight of intangible assets compared to tangible assets. The work published by Ocean Tomo on the market value of S&P 500 companies illustrates this structural transformation: the share of intangible assets far exceeds that of tangible assets in the overall valuation of listed groups.

Thus, brand valuation was not born from an abstract academic desire. It results from three converging dynamics:

• The legal recognition of the brand as an exclusive and transferable right;
• The accounting requirement for separate identification of intangible assets in business combinations;
• The fiscal and economic necessity to document the remuneration of intangible assets in an internationalized context.

Today, brand valuation is part of a structured normative framework. It mobilizes international standards such as IFRS, OECD guidelines, and valuation standards published by the International Valuation Standards Council, notably IVS 210 relating to intangible assets.

Historical evolution thus shows a progressive transition from a logic of protection to a logic of measurement. The brand, initially conceived as an instrument of commercial distinction, becomes a strategic asset whose value must be identified, isolated, and justified.

Understanding this historical trajectory is essential: it explains why brand valuation is neither a purely marketing exercise nor a simple accounting operation, but a discipline located at the crossroads of law, finance, and strategy.

Legal and Financial Definition of the Brand (French and Swiss Law)

The rigorous understanding of brand valuation assumes, as a prerequisite, clarifying its legal nature and its financial qualification. A brand is not only a strategic asset in the economic sense; it is first and foremost a right, and then an intangible asset capable of being measured. This distinction is fundamental: without a solid legal foundation, there is no value-able asset in the financial sense of the term.

The Brand in French Law: A Protected Distinctive Sign

In French law, the brand is defined by the Intellectual Property Code. Article L711-1 provides that a brand is a sign used to distinguish the products or services of a natural or legal person from those of other persons.This definition rests on three structuring elements:

• A sign: it can be verbal, figurative, sound, three-dimensional, or combined.
• A distinctive function: the brand must allow for the identification of the commercial origin of products or services.
• Protection by registration: the brand confers on its owner an exclusive right of exploitation in a given territory, for specific classes.

The brand is therefore an industrial property right. It is assignable, transferable, licensable, and can be the subject of a contribution to a company. This proprietary character is decisive: it confers an autonomous economic dimension on the brand.Conversely, the simple notoriety of an unregistered sign does not benefit from the same level of legal security. Brand valuation assumes, in practice, a prior analysis of its validity, its territorial scope, its duration of protection, and the potential existence of litigation.

The Brand in Swiss Law: An Analogous Logic

In Switzerland, the definition is set by Article 1 of the Federal Act on the Protection of Trade Marks and Indications of Source (TmPA, SR 232.11). The brand is a sign capable of distinguishing the products or services of one enterprise from those of other enterprises.Source: Federal Act on the Protection of Trade Marks (SR 232.11), Fedlex.

Swiss law shares the same fundamental principles:

• Distinctive function
• Protection by registration
• Exclusive right of use
• Possibility of assignment and licensing

The protection conferred by the TmPA allows the owner to prohibit the use of an identical or similar sign likely to create a risk of confusion. As in French law, the brand constitutes a proprietary right, recorded in the register, and transferable.The legal analysis prior to any evaluation must therefore examine:

• The scope of registered classes
• The territorial extent
• Seniority and renewal
• The existence of opposition procedures or litigation

A legally fragile brand cannot support the same economic value as a solidly protected right.

The Financial Qualification of the Brand: An Identifiable Intangible Asset

While the law confers legal existence, finance determines the possibility of economic recognition.IAS 38 relating to intangible assets, published by the International Accounting Standards Board, defines an intangible asset as an identifiable non-monetary asset, without physical substance, controlled by the entity and generating future economic benefits.

Three criteria are essential:

• Identifiability: the asset must be separable or result from a legal or contractual right.
• Control: the company must have the capacity to restrict access to third parties.
• Future economic benefits: the asset must contribute to generating cash flows.

The brand typically meets these three criteria:

• It is separable (assignable, licensable).
• It rests on a registered legal right.
• It allows for the generation of future income.

However, IAS 38 distinguishes acquired brands from internally developed brands. Internally created brands are, in principle, not recognized as assets on the balance sheet due to difficulties in reliably measuring attributable costs and uncertainty regarding the generation of future benefits. This accounting distinction explains a frequent paradox: a brand can have considerable economic value without appearing on the balance sheet of the company that developed it.

How to Protect Your Brand in French and Swiss Law

The economic value of a brand rests primarily on the solidity of its legal protection. A brand only becomes a strategic asset if it is legally secured, enforceable against third parties, and exploitable without major risk of contestation.Protecting your brand is therefore not an administrative formality: it is a prerequisite for any valuation, licensing, or assignment process.Protection rests on a fundamental principle common to French and Swiss law: registration confers an exclusive right. Without formal filing, protection is limited and uncertain.

Protecting Your Brand in French Law

In France, the protection of a brand rests on a fundamental principle: the exclusive right arises from registration with the National Institute of Industrial Property (INPI). The brand only benefits from full protection enforceable against third parties as of its filing and registration. The first step, therefore, consists of determining if the chosen sign is legally protectable.

The sign must indeed possess a distinctive character. It cannot be limited to the necessary, generic, or descriptive designation of the product or service concerned. Article L711-2 of the Intellectual Property Code specifies that a sign devoid of distinctive character cannot be validly registered. A purely descriptive term—such as "Fresh Bread" for a bakery—would be refused, as it does not allow for identifying the commercial origin of the products but only their nature. Similarly, a sign contrary to public order, misleading, or infringing on prior rights (existing brand, corporate name, trade name, geographical indication) cannot be registered. The availability of the sign thus constitutes an essential condition for the validity of the filing.

Before any formal procedure, a prior art search is necessary. This step, though appearing optional, is strategic in practice. It consists of verifying that no identical or similar brand has already been registered for identical or comparable products or services. In the absence of prior verification, the owner is exposed to an opposition procedure before the INPI or, subsequently, to a judicial action for nullity. The legal security of a brand therefore begins with an analysis of its competitive environment.

The filing is then carried out online with the INPI. The applicant must precisely identify the sign to be protected, designate the relevant classes of products and services according to the international Nice Classification, and indicate the owner of the right. This precision is decisive: protection is only granted for the selected classes. Once registered, the brand benefits from protection for a duration of ten years, renewable indefinitely for successive ten-year periods. Registration confers on the owner an exclusive right of exploitation on French territory, allowing them to prohibit the use of an identical or similar sign likely to create a risk of confusion.

Protection, however, does not end at registration. The owner must ensure active monitoring of the trademark register to detect potential conflicting filings and, if necessary, file an opposition within the prescribed time limits. In the event of a characterized infringement, an action for infringement can be brought before the competent courts. Furthermore, the trademark right is subject to an obligation of use. According to Article L714-5 of the Intellectual Property Code, a brand that has not been subject to serious use for an uninterrupted period of five years can be subject to revocation. A brand registered but not exploited progressively loses its legal substance and, consequently, its economic value.

Thus, the protection of a brand in French law is not limited to a single act of filing. It constitutes a continuous process articulating sign selection, availability verification, formal registration, and active defense. This legal solidity directly conditions the brand's capacity to be exploited, licensed, or valued in a financial context.

Protecting Your Brand in Swiss Law

In Switzerland, the protection of a brand also rests on the principle of registration. The exclusive right arises from filing with the Federal Institute of Intellectual Property (IPI), the competent authority for industrial property. As long as the sign is not registered, protection remains limited and difficult to enforce against third parties. The brand thus constitutes a formal right, whose existence and scope are determined by its entry in the register.

The first condition for protection relates to the distinctive character of the sign. According to Article 2 of the Trade Mark Protection Act (TmPA) (SR 232.11), signs belonging to the public domain cannot be protected unless they have established themselves as a brand through use. Specifically excluded are descriptive, generic, or misleading signs. The brand must allow for identifying the commercial origin of products or services and distinguishing them from those of other enterprises. A term directly describing the nature or quality of a product will, in principle, be refused registration. This requirement ensures that protection does not confer a monopoly on expressions necessary for trade.

Before any filing, a prior art search is strongly recommended. Although the IPI does not automatically examine conflicts with prior rights, the owner of a registered brand can file an opposition against a subsequent application within a determined period. A prior analysis of Swiss and international registers significantly reduces the risk of litigation. The legal security of a brand depends largely on this upstream verification.

The filing procedure is carried out with the IPI and involves the precise identification of the sign as well as the designation of products and services according to the international Nice Classification. Protection is granted for a duration of ten years from the filing date and can be renewed indefinitely for successive ten-year periods. Registration confers on the owner an exclusive right of use on Swiss territory and the ability to prohibit the use of identical or similar signs likely to cause a risk of confusion.

However, as in French law, registration alone is not enough to preserve the brand's legal value. Swiss law imposes an obligation of use: if the brand is not exploited for an uninterrupted period of five years, it can be subject to an action for revocation. Article 12 TmPA expressly provides for this possibility. Use must be serious and relate to the products or services for which the brand is registered. A brand purely "filed" without effective exploitation progressively loses its legal force and, consequently, its economic attractiveness.

Finally, protection assumes constant vigilance. The owner must monitor new filings likely to infringe their rights and act through opposition or legal proceedings when necessary. A brand that is not defended may see its scope of exclusivity weaken over time.

In Swiss law, brand protection rests on a combination of formalization, distinctiveness, effective exploitation, and active defense. This legal architecture constitutes the indispensable foundation for any financial valuation process. Without a valid, exploited, and defended right, the brand cannot claim a stable and lasting economic value.

Why Protect Your Brand?

Protecting your brand is not just a legal or administrative reflex. It is a strategic decision that affects the long-term viability of the company, its ability to differentiate itself, and the securing of its intangible assets. Protection constitutes the foundation upon which all future economic exploitation rests. Several objective and factual reasons justify this approach.

The first reason relates to securing an exploitation monopoly. Trademark registration confers on its owner an exclusive right over the sign for the designated products or services. This right allows for prohibiting the use of identical or similar signs likely to create a risk of confusion. In French law, this exclusivity stems from the Intellectual Property Code; in Swiss law, it results from the Trade Mark Protection Act (TmPA). Without protection, a competitor can adopt a similar sign, capture part of the customer base, and dilute the value of the built positioning. Legal protection is therefore a tool for competitive defense.

The second reason concerns the preservation of economic and proprietary value. A protected brand constitutes an identifiable, transferable, and licensable asset. It can be the subject of a contribution, a sale, or a license agreement generating royalties. Conversely, an unprotected brand cannot be securely valued in an M&A transaction or an intra-group structuring. Legal solidity directly influences the perception of risk and, consequently, the financial value of the asset.

The third reason lies in securing marketing and commercial investments. Developing a brand involves significant expenses: communication, design, distribution, digital awareness, SEO. Without formal protection, these investments can indirectly benefit third parties who exploit a similar sign. Registration ensures that the efforts made exclusively profit the company that undertook them.

The fourth reason relates to the control of litigation risk. Filing your brand after verifying its availability considerably reduces the risk of infringement or nullity actions. Conversely, exploiting an unprotected sign exposes the company to subsequent claims that could lead to a forced change of commercial identity, with major financial and reputational consequences. Protection thus acts as a mechanism for dispute prevention.

The brand allows for strengthening credibility with partners and investors. A company that holds structured industrial property rights demonstrates rigorous management of its strategic assets. In a context of fundraising, sale, or international expansion, the existence of a registered trademark portfolio constitutes a strong signal of organizational maturity and risk management.

Protecting your brand is not limited to preventing copying. it is about guaranteeing an exploitation monopoly, securing proprietary value, protecting investments made, limiting legal risk, and strengthening the company's economic credibility. Protection constitutes the indispensable prerequisite for any consistent financial valuation process.

Why Evaluate or Value a Brand?

Evaluating a brand is not a theoretical or academic exercise. It is a strategic process, often triggered by a specific event in the company's life: a transaction, restructuring, litigation, fundraising, or fiscal reorganization. Once the brand constitutes a legal and economic asset, its value must be able to be measured, explained, and defended.

The first reason to evaluate a brand lies in the context of mergers and acquisitions. When a company is acquired, the price paid frequently exceeds the book value of tangible assets. International standards then require identifying the acquired intangible assets separately, including brands and trade names. IFRS 3 relating to business combinations, published by the International Accounting Standards Board, requires this Purchase Price Allocation (PPA). Valuation thus allows for isolating the part of the price attributable to the brand, distinct from residual goodwill. Without this step, the financial reading of the transaction would remain imprecise.

The second reason relates to the establishment of license agreements. When a brand is exploited by a third party—distributor, franchisee, subsidiary—determining a royalty rate assumes a consistent estimate of its economic value. In an intra-group context, this requirement is reinforced by the OECD Transfer Pricing Guidelines, which impose compliance with the arm’s length principle for transactions involving intangible assets. Evaluation then becomes a tool for tax documentation and risk management.

A third reason concerns impairment tests and financial reporting. Acquired brands recognized on the balance sheet must be subject to a regular check of their recoverable value. If the economic performance associated with the brand degrades, an impairment may be necessary. Evaluation allows for assessing whether future flows justify maintaining the value recorded in the accounts.

The fourth reason relates to litigation and disputes. In cases of infringement, damage to reputation, or unfair competition, brand evaluation allows for quantifying the harm suffered or the gain unduly realized by a third party. The economic value then becomes a central element in the assessment of damages.

Evaluation can be part of a proprietary strategy and governance logic. A company wishing to restructure its asset portfolio, organize a contribution in kind, prepare for fundraising, or set up a holding structure must have a reliable estimate of the value of its intangible assets. The brand, when it constitutes a structuring element of the economic model, cannot be left in a zone of uncertainty.

Beyond these specific contexts, a more fundamental reason justifies evaluation: the brand influences the company's ability to generate future flows. If it allows for commanding a premium price, increasing customer loyalty, or reducing acquisition costs, it directly affects profitability and risk. In corporate finance, the value of an asset corresponds to the discounted value of the flows it generates. Evaluating a brand therefore amounts to objectifying its real contribution to economic performance. In this framework, brand evaluation is often part of a more global company valuation process, aiming to determine the value of a set of tangible and intangible assets within a structured economic model.

Thus, evaluating or valuing a brand is not a cosmetic exercise. It is an act of financial, legal, and strategic management. It allows for transforming a perceived competitive advantage into a structured measurement, consistent with international standards and adapted to the economic context in which the company operates.

In Which Contexts and Under What Conditions Should a Brand Be Valuated?

Brand valuation is neither a systematic obligation nor a purely voluntary process. It occurs in specific contexts where a legal, accounting, fiscal, or transactional need requires determining an objectified value. The circumstances vary according to the applicable normative framework, particularly in France and Switzerland, but the underlying logic remains comparable: once a proprietary right is transferred, exploited, or integrated into a financial operation, its value must be justified.

French Context

In France, brand valuation becomes necessary primarily in the context of structuring operations affecting the company's assets.

1. M&A Transactions: When a company acquires another entity, the price paid must be broken down between different identifiable assets. In accordance with international accounting standards (IFRS 3) or, where applicable, French rules, identifiable intangible assets—including brands—must be distinguished from goodwill. This allocation assumes an independent and documented evaluation.
2. Contributions in Kind: When a brand is contributed to the capital of a company, notably during creation or restructuring, the law requires the intervention of a Contribution Auditor (commissaire aux apports) responsible for verifying the value of the contributed goods.
3. License or Franchise Agreements: Setting a consistent royalty rate requires a prior estimate of the brand's economic value. In the event of a tax audit, particularly regarding transfer pricing for international groups, the administration may require justification for the level of remuneration applied to intangible assets.
4. Litigation: Particularly in cases of infringement or damage to image, courts must assess the harm suffered, which assumes evaluating the brand's economic contribution to the company's results.
5. Impairment Tests: When the brand is listed as an asset on the balance sheet and economic performance declines, the recoverable value must be compared to the book value.

Swiss Context

In Switzerland, the situations leading to brand valuation are similar in their economic logic but occur within a specific legal and fiscal framework.

1. Corporate Transactions: During a share deal or asset deal, determining the value of intangible assets is a central element of negotiation and price allocation. Even if Swiss GAAP FER or the Code of Obligations do not always require such detailed breakdown as IFRS, investors and auditors generally require precise documentation.
2. Intra-group Restructuring: The transfer of a brand from one entity to another, or the establishment of a license agreement between related companies, must respect the arm's length principle. The Federal Tax Administration (ESTV/AFC) applies OECD transfer pricing principles.
3. Contributions in Kind: Required during the formation of a public limited company (SA/AG) or a limited liability company (Sàrl/GmbH). The Swiss Code of Obligations requires the verification of the value of non-monetary contributions to protect creditors and partners.
4. Litigation: In cases of violation of the Trade Mark Protection Act (TmPA), evaluation allows for assessing economic damages, lost profits, or the unjust enrichment of the infringer.
5. Fundraising and Governance: Swiss investors pay particular attention to the securing and valuation of intangible assets to assess their real contribution to the overall value of the company.

How to Value a Brand: Definitions, Approaches, and Valuation Methods (Attributing Flows to a Right)

Valuing a brand consists of estimating the current economic value of the exclusive right attached to this distinctive sign. It is neither a measure of popularity nor an isolated marketing performance indicator. Financial valuation rests on a fundamental principle of corporate finance: the value of an asset corresponds to the discounted value of the future flows it is capable of generating.

The brand, as a registered right, constitutes an identifiable intangible asset as defined by the IAS 38 standard. To be value-able, it must be controlled by the company and capable of producing future economic benefits.Therefore, the central methodological challenge consists of answering a structuring question: what share of the company's future flows is specifically attributable to the brand, and not to other assets? This attribution constitutes the heart of the valuation exercise.

Valuation Approaches: Three Recognized Conceptual Frameworks

International valuation standards, notably IVS 210 and the ISO 10668 standard dedicated to brands, identify three main approaches:

1. The Cost Approach: This rests on the idea that an asset is worth at least what it would cost to recreate or replace it. Applied to a brand, it consists of estimating the investments necessary to reach a comparable level of awareness, image, and positioning. This often provides a "floor" value.
2. The Market Approach: This consists of observing comparable transactions—brand sales, license agreements, sectoral royalty rates—and deducing a value by analogy. This has the advantage of referring to real market data, although comparability is often delicate.
3. The Income Approach: This consists of determining the present value of future economic flows attributable to the brand. This is generally preferred when reliable financial information is available, as it aligns with the discounted cash flow (DCF) logic of corporate finance.

Valuation Methods: Operational Implementation Tools

1. The Cost Approach:

• Historical Cost Method: Accumulates expenses actually incurred (design, marketing studies, launch, legal filings). It is objective but limited because past costs do not guarantee future flow generation.
• Replacement or Reconstitution Cost Method: Estimates the amount that would need to be invested today to recreate an equivalent brand. It is more prospective but remains an investment measurement rather than a profitability measurement.

2. The Market Approach:

• Comparable Transactions Method: Analyzes sales of similar brands in comparable market conditions. It requires access to specialized databases and adjustment work.

3. The Income Approach:

• Relief from Royalty Method: Estimates the royalty the company would have had to pay if it did not own the brand and had to license it. The savings realized through ownership constitutes the flow attributable to the brand. These flows, net of tax, are then discounted.
• Discounted Cash Flow (DCF applied to the brand): Aims to isolate the share of cash flows attributable specifically to the brand.
• Excess Earnings Method: Determines the overall profitability of the activity, then subtracts the normal remuneration of other contributing assets (tangible assets, technology, human capital). The residual flow is attributed to the brand.

Example of Brand Evaluation and Valuation

To illustrate the different methods, we consider a simplified case: a company exploiting a registered brand in the premium consumer goods sector.Basic Financial Assumptions:

• Revenue: 20 M
• Operating Margin: 12%
• Tax Rate: 25%
• Forecast Growth: 2%
• Discount Rate: 11%

1. Historical Cost Method

Investments:

• Identity creation/branding: 600,000
• Launch campaigns: 1,200,000
• Communication (5 years): 800,000
• Legal/filings: 100,000‍

Total: 2,700,000 (2.7 M)

2. Reconstitution or Replacement Cost Method

Current estimated costs:

• Digital/media campaigns: 1.4 M
• Digital campaigns: 900,000
• Commercial deployment: 700,000
• Legal protection: 150,000‍

Total: 3,150,000 (3.15 M)

3. Transaction Comparables Method

Observed sector multiples: 0.15x to 0.25x revenue.Applying a conservative median of 0.18x:20 M×0.18= 3.6 M

4. Relief from Royalty Method (Revised)

Conservative royalty rate of 2%.Annual theoretical royalty: 20,000,000×2%=400,000Net flow after tax:

400,000×(1−25%)=300,000

Applying growth (2%) and discount rate (11%):

Value≈300,000/(11%−2%)

=300,000/9%

= 3.33 M

Royalty Rates and Comparable Transactions

Brand royalty rates vary based on (i) sector, (ii) royalty base (net sales, wholesale, gross revenue, etc.), and (iii) contractual terms (exclusivity, territory, etc.).

Academic Table: Indicative Royalty Rates by Sector

The observed rates do not constitute tax recommendations. Their application must be analyzed with an expert based on the specific legal context of the company.

Academic Table: Multiples Observed in Brand Transactions

Methodological Box: Royalty Rates and Brand Transactions

The intervals presented are synthesized from specialized transactional databases (RoyaltyStat, ktMINE, Markables, BVR DealStats) and professional reports.The methodology follows:

• IVS 210 (Intangible Assets)
• ISO 10668 (Brand Valuation)
• IAS 38 (Accounting Standards)Data has been cleaned to neutralize extreme cases and atypical transactions. Multiples vary based on effective notoriety, territory, pricing power, legal solidity, and sector maturity. These are analytical benchmarks and do not replace an individualized evaluation.

Sensitivities and Pratical Adjustments

Factors that determine rate adjustments (Force/Notoriety, Exclusivity, Geography, Duration, etc.):

• Brand Strength: A premium can be justified if the brand allows for higher pricing or superior conversion.
• Territory: Global vs Local.
• Exclusivity: Does not always automatically increase value; it depends on what the exclusivity "buys" (access, protection).
• Licensee Obligations: if the licensee bears heavy marketing costs, a lower royalty rate is often consistent.
• Intangible Bundles: In pharma, rates might include brand + assistance + dossiers; these must be "de-bundled" to value the brand alone.

CEO Message

"Evaluating a brand does not consist of measuring a subjective perception nor valuing a simple graphic sign. A brand is a right. But above all, it is an economic capacity.

In my practice in corporate finance and intangible asset valuation, I find that the brand is often either overestimated—by emotional attachment—or underestimated—by ignorance of its real contribution to flows. The truth lies in the analysis.

A brand only has value if it allows for (i) generating excess margins, (ii) increasing sales volume, (iii) reducing acquisition costs, and (iv) stabilizing demand over time.

In other words, its worth is the flows it secures.The goal is not to get a high number. The goal is to get a consistent, defensible, structured number, compatible with international standards and the company's economic reality.

The brand is a strategic asset. But like any strategic asset, it must be analyzed with discipline."

Conclusion: The Brand, from a Distinctive Sign to a Structured Financial Asset

The brand is often perceived as an image element. In reality, it constitutes a protected legal asset and a measurable economic lever. Throughout this analysis, one central idea has emerged: brand valuation is not an arbitrary construction. It rests on a rigorous articulation between law, finance, and economics.

We have shown that:

• Legal protection constitutes the foundation of value.
• Evaluation occurs in precise contexts (M&A, restructuring, licensing, tax).
• Cost, market, and income approaches pursue a common goal: attributing flows to a right.
• Consistency between methods is an essential credibility criterion.
• The value of a brand depends not on what it represents symbolically, but on what it allows economically.

It is not declared | It is demonstrated.‍

In an environment where intangible assets represent a growing share of company value, the ability to rigorously evaluate a brand becomes a major strategic advantage. It allows for securing a transaction, structuring fundraising, documenting a transfer pricing policy, or arbitrating an investment decision.The issue goes beyond technique. It is about integrating the brand into a logic of structured financial governance. Because beyond the logo, beyond the image, the brand becomes an asset once it is protected, exploited, measured, and integrated into a value-creation strategy.

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Author

Aristide Ruot, Ph.D‍

Founder | Managing Director