A Global and Local Outlook
- Elgar Intellectual Property Law and Practice series
Edited by Irene Calboli and Jacques de Werra
Chapter 7: BRAND DIFFERENTIATION AND INDUSTRY SEGMENTATION: DRIVERS FOR TRADEMARK VALUATION IN CORPORATE TRANSACTIONS
Over the past decade, the fair value of intangible assets and intellectual property has been much more prominent on the balance sheets of private and public companies on a global level. While this transition has largely been driven by changes in financial reporting standards, as applicable to business combinations of all forms, a combined increase in licensing and asset (nonenterprise level) transactions has led to a renewed focus on the value creation opportunities afforded by this asset class. Specifically, trademarks, trade names, and brands are a class of marketing related intangible assets where it is not uncommon for corporations to have dedicated, and highly experienced professionals, whose sole focus is value creation and maximization through a combination of organic development, acquisitions, and licensing activities. In this chapter our goal is to provide a foundation for how corporations and investors recognize and measure trademark value, particularly in the context of transaction considerations. We will first review the concept of trademark/ brand life cycles, highlighting how managing brands and attempting to consistently measure value creation provides actionable information for corporate managers. As this knowledge base is commonly rooted in income- and market-based facts and assumptions, we will discuss how this data provides a valuation framework from which to expand on.
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