Valuing your brand – How much is your trade mark worth and why is this important?

1. Factors that influence a trade mark’s value

Numerous factors come into play when assessing the value of a trade mark and whilst the list of factors is quite extensive, four key considerations are:

a) Brand reputation - a trade mark with a strong reputation tends to attract more customers, driving revenue and profit.

b) Longevity and consistency - a trade mark that has been consistently used for many years is likely to have built significant goodwill which can enhance the trade mark’s value.

c) Revenue generated under the trade mark - the greater the revenue generated under the trade mark, the more valuable the trade mark.

d) Growth Potential - trade marks that have significant potential for growth and expansion are more valuable.

2. Methods to value a trade mark

There are several methods that can be used to value a trade mark; the three most common methods are the “Cost Approach”, the “Market Approach” and the “Income Approach”. Our previous article summarised these key methods and considered the advantages/disadvantages for each of these.

3. Protecting and enhancing a trade mark’s value

Once you have determined the value of your trade mark, protecting and enhancing that value is a priority. Whilst there are a multitude of ways to protect and enhance a trade mark’s value, the key methods are to:

• Obtain (and protect) registered protection for your trade mark.
• Continuously use your trade mark.
• Consistently use your trade mark across all platforms.
• Expand the use and protection of your trade mark into new markets and/or consider licensing your trade mark to third parties.

Summary

Understanding how to value a trade mark is essential for businesses, whether they are preparing for a sale, a licensing deal, or financing round, as an accurate trade mark valuation will aid a business in securing the best possible outcome. However, trade mark valuation can prove to be very difficult and can only be properly ascertained once a multifactorial analysis has been undertaken. Given the complexities involved in valuing a trade mark, businesses are strongly advised to engage a professional who shall provide an unbiased third-party valuation. As trade mark attorneys, we are not experts in this regard. We do, however, provide guidance when it comes to protecting and enhancing a trade mark’s value and our advice should thus be sought prior to valuation. If you have any further questions regarding how to value your trade marks, we recommend that our advice is sought as soon as possible.