Trade Marks and Brand Valuation
The commercial landscape is more competitive than ever – and with the rising financial pressures on consumers and businesses, hungry and often ruthless competitors and an increasingly crowded marketplace – brands have to work harder and smarter just to survive, let alone thrive.
Businesses also have to make sure they’re able to attract and retain quality talent, establish strong business partnerships, unlock new growth opportunities and attract investors or buyers.
There’s no doubt that a registered trade mark can play a crucial role in enabling businesses of all shapes and sizes to operate more effectively over the long-term – and there’s also no doubt that the value of a brand is closely aligned to its intellectual property assets.
In this article, we examine brand valuation and look at the impact that a registered trade mark has on this.
What is brand value?
What is brand value? Brand value is essentially the worth of your brand from a monetary perspective. In other words, if a third party was to buy your brand – what would they pay?
How does a trade mark affect brand valuation?
The value of a brand is influenced by a range of balance sheet items including company assets, revenue, profits and liabilities as well as non-financial metrics like the brand’s identity and sometimes the goodwill of the business. These can be harder to quantify, but there is no doubt that if a brand is protected by a registered trade mark, its value is enhanced significantly.
A registered trade mark is arguably one of a business’s most valuable asset – regardless of the size of the business. Trade mark registration enables brands to build a strong and consistent reputation with the confidence of legal protection – and it is as valuable to an entrepreneur operating in a niche market as it is to a global giant.
Can you place a value on a trade mark?
While there isn’t a standardised method of trade mark valuation (and it’s best left to financial experts with specialist skills and expertise), a registered trade mark is a valuable balance sheet asset.
That’s because a registered trade mark is a symbol of brand identity, and without the ring of protection that this legal badge of origin provides, the brand’s exclusivity cannot be guaranteed. This leaves a brand vulnerable to competitors who can simply jump on the bandwagon of someone else’s hard work and investment and hijack their market position.
If you own a business, it is imperative to look after your invaluable intellectual property so that you protect and enhance the value of your brand, maintain your competitive advantage and secure the future of your business.
Check out what IP Australia has to say on why it’s important to value IP.
How does trade mark registration impact the value of a brand?
Through trade mark registration, a business is able to:
- Differentiate their product or service
- Build a strong reputation
- Build meaningful goodwill
- Establish trust with consumers
- Enhance customer loyalty
- Facilitate business relationships
- Unlock avenues for growth
- Attract investors or potential buyers
- Take advantage of commercial opportunities from trade mark registration such as licensing
All of these elements have an impact on brand valuation and the sustainable success of a business – so it’s worthwhile examining some of them in greater detail.
Trade marks and brand valuation
Trade mark registration:
- Enables product or service differentiation. Once your brand is registered in your nominated areas of operation, you can have the confidence to grow your business knowing that your brand is legally protected from unscrupulous copycats or even unwitting competitors. This exclusivity will help you build trust in your business and develop consistent, positive relationships with customers and stakeholders, leading to a stronger, more valuable brand.
- Helps attract potential buyers or investors. A savvy investor will recognise the inherent value of a strong trade mark. The same goes with potential buyers. It is far easier to sell a business or attract financiers if the investor has the peace-of-mind that comes with a registered trade mark.
- Unlocks avenues for growth. A registered trade mark is a tradeable asset, so it can add value to a balance sheet through licensing agreements etc.
- Contributes to greater goodwill. We often hear about ‘goodwill’ when a business is changing hands. Goodwill is an intangible asset related to a business’s intellectual property that includes elements such as reputation and brand recognition. Another way of explaining goodwill is that it is a potential competitive advantage that an entity will acquire when it buys a particular company. Clearly, a registered trade mark is a major aspect of goodwill.
Safeguarding your business’s IP
A company’s IP assets can have a significant impact on the growth and the sustainability of a business and can make up a significant proportion of its value when it comes to attracting funding or finding a buyer. This article on why a registered trade mark is so valuable at sale time contains valuable insights for business owners.
A trade mark is a valuable IP asset – and the only way to safeguard it is through trade mark registration.
Key takeaways
Smart business owners, entrepreneurs and investors appreciate the value and security that a registered trade mark brings to their balance sheet. An experienced trade marks attorney can help maximise the value of your brand by developing and managing a carefully planned strategy which will ensure that your IP rights are enforced, maintained and exploited.
If you have any questions relating to trade marks and brand value or wish to discuss any other aspect of trade marks including free trade mark searches, you’re welcome to get in touch with MMW Trademark Services through our website or by calling 03 8288 1432. Our highly skilled trade marks attorney, Jacqui Pryor, has decades of experience in this field and would be very happy for an obligation-free chat.
