Determining a company’s brand value during mergers and acquisitions (M&A) is a vital step for both buyer and seller, as it helps both parties reach a satisfactory agreement. Researching brand value during the due diligence phase of the process will allow deals to progress smoothly and ensure that the seller can make a profit commensurate with their company’s value.
Due diligence is the exploratory portion of the M&A process, in which the buyer investigates the business dealings, intellectual properties, and financial health of the seller, among other factors. This part of the M&A process is the opportune moment to pursue a valuation of a company’s brand value, no matter what side of the deal one is on. Although this factor can seem somewhat nebulous, one can come to a conclusion by investigating the brand’s customer satisfaction levels, along with sales and margins, which helps to determine how loyal customers are to the company and how much growth one can expect to see in the future as a result. One should also invest in customer surveys and interviews and conduct an audit of competing brands, which can establish the importance and potential of a brand in its market.
Although it may seem as though this part of the process should only be undertaken if one is interested in buying, it is also essential for the seller. Determining the brand value of one’s own company allows one to enter negotiations with an approximate figure and armed with data that backs up the worth of one’s business. This practice, which is routinely employed at Viper Equity Partners, allows the seller to come to negotiations in a more stable and defensive position and leave meetings with a fair price that accurately reflects the worth of their company. Leaving all brand valuation to the buyer can often result in the seller being forced to accept an unsatisfactory deal; as in all negotiations, it is best to prepare for any eventuality to ensure the final agreement is in one’s best interests.
Since brand value is both a vital point of negotiation and intangible, it can seem daunting and wasteful to calculate it. However, employing professionals to determine the value provides an undeniable advantage at the closing table, ensuring a satisfactory outcome at the end of any merger or acquisition.