50GoldenBrands - Brand Value Methodogy
Royalty Relief Method
The "Royalty Relief" method is based on the notion that a brand holding company owns the brand and licenses it to an operating company. The notional price paid by the operating company to the brand company is expressed as a royalty rate. The NPV of all forecast royalties represents the value of the brand to the business. The attraction of this method is that it is based on commercial practice in the real world. It involves estimating likely future sales, applying an appropriate royalty rate to them and then discounting estimated future, post-tax royalties, to arrive at a NPV.
Brand Finance plc uses the "Royalty Relief" method for two reasons:
Steps in the Royalty Relief brand valuation process:
1. Obtain brand specific financial and revenue data.
2. Model the market to identify market demand and the position of individual brands in the context of market competitors.
3. Establish the notional royalty rate for each brand
4. Calculate the notional future royalty income stream for each brand
5. Calculate discount rate specific to each brand, taking account of its size, international presence, reputation, and Brand Rating
6. Discount future royalty stream to a net present value (NPV)
Brand Finance plc is the leading independent intangible asset valuation and brand strategy firm, helping companies to manage their brands more intelligently for improved business results.
For further enquiries relating to this report, please contact:
David Haigh, CEO d.haigh@brandfinance.com
Mike Rocha, Managing Director m.rocha@brandfinance.com
Visit the 50 Golden Brands website now for more information.