A listed company was planning to demerge one of its business divisions (Exit-Co) which, for some of its operations, used the same brand as other parts of the business (Remain-Co). The CEO realised that ownership and licensing of the brand IP would not only impact the value of both enterprises, but would also be hotly contested. Our brand valuation expert was asked to quantify the value differential between alternative brand arrangements.

The analysis segmented the operations of Remain-Co and Exit-Co by brand, product category, channel and region. Within each market segment, the valuations team quantified brand equity, market attractiveness and brand value. The resulting metrics surprised the client. Although the heritage of the corporate brand was in Exit-Co, a large portion of its revenue came from unbranded sales through intermediaries and a new growth market needed a new brand. In contrast, although Remain-Co had a portfolio of product brands, it relied heavily on the corporate brand as an umbrella brand and as a repository of corporate reputation.

Although the optimal solution was far from obvious at the outset, the brand metrics clearly articulate that Remain-Co should maintain ownership of the brand IP, and license it to Exit-Co for use in a single product category. In addition to giving the management team confidence in the optimal strategy, the valuation process took the heat out of the debate. Both Exit-Co and Remain-Co supported the decision.