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Brand Valuation: The financial value of brands | Interbrand | brandchannel.com
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Brand Valuation: The financial value of brands
By Interbrand
editor@brandchannel.com
elsewhere on brandchannel
"If this business were split up, I would give you the land and bricks and mortar, and I would take the
brands and trade marks, and I would fare better than you."
— John Stuart, Chairman of Quaker (ca. 1900)
In the last quarter of the 20th century there was a dramatic shift in the understanding of the creation of
shareholder value. For most of the century, tangible assets were regarded as the main source of business
value. These included manufacturing assets, land and buildings or financial assets such as receivables
and investments. They would be valued at cost or outstanding value as shown in the balance sheet. The
market was aware of intangibles, but their specific value remained unclear and was not specifically
quantified. Even today, the evaluation of profitability and performance of businesses focuses on indicators
such as return on investment, assets or equity that exclude intangibles from the denominator. Measures of
price relatives (for example, price-to-book ratio) also exclude the value of intangible assets as these are
absent from accounting book values.
This does not mean that management failed to recognize the importance of intangibles. Brands,
technology, patents and employees were always at the heart of corporate success, but rarely explicitly
valued. Their value was subsumed in the overall asset value. Major brand owners like The Coca-Cola
Company, Procter & Gamble, Unilever and Nestlé were aware of the importance of their brands, as
indicated by their creation of brand managers, but on the stock market, investors...