Enhancing Brand Equity Value Yields Support for Expansion Financing
Client: Custom Aftermarket Automobile Parts Manufacturer
Challenge: Determine Value of Brand Name to Support Financing Request
To help secure financing for business expansion, a leading manufacturer of custom aftermarket automobile parts asked AccuVal to determine the full value of its brand name and custom wheel products. The company sells to owners of production automobiles and to professional auto racers and drag racers. Hot Rod magazine has recognized several of the company's custom wheels as the accessory that technologically and stylistically revolutionized the aftermarket wheel industry.
AccuVal Approach
AccuVal knew it was critical that the lender understand the dynamics and forces of this evolving industry. Instead of limiting the review of the brand value to the legal documents that secured the rights to the trademark, the firm took a broader view and examined all the complementary assets that constituted the brand. AccuVal explained that the aftermarket wheel industry has faced challenges from offshore competitors as well as OEMs, and manufacturers have weathered periods of consolidations and slow growth. To respond to those conditions and to rationalize its product line, the company had exited the OEM business, and realigned and outsourced some of its manufacturing operations.
To determine appropriate royalty rates for products the company could license, AccuVal used third-party databases and other sources to research each product brand's profitability, and consumer recognition and importance. Next, 10 separate models were developed to capture the value of the company's brands and products.
Bottom Line: Lender Agrees With Valuation, Company Able to Secure Financing
When the brand's attributes were grouped as a salable bundle, it maximized and greatly enhanced the brand's asset value, providing the lender with exceptional detail and depth to the valuation analysis. AccuVal's valuation conclusion was supported by both an income approach as well as a cost approach. The lender agreed, and the company was approved for the maximum amount of financing it sought for expansion.
The AccuVal AdVantage™
Decades of experience in appraising intangible assets and other intellectual property in a variety of industries. Rare depth of understanding that brand equity extends well beyond trademarks alone. Ability to tap real market information, financial performance, barriers to entry and competitive factors. That's The AccuVal AdVantage™ at work.
