Insights | September 24, 2021

Roschier and BrandWorxx joint event, key takeaways: Brands in acquisitions

At a recent event, experienced professionals discussed the role of brands in acquisitions. Questions regarding how brands as assets should be considered in acquisitions, and the extent to which brands may have a significant impact on the acquisition, were on the agenda. Furthermore, the reinforcement of a brand's value through leadership and continuous development, and how the analysis of brands may benefit both parties in the context of acquisitions, were addressed. 

The speakers at the Brands in corporate acquisitions event included Roschier Partner Markku Tuominen and Roope Jääskeläinen, Senior Consultant at BrandWorxx, followed by a panel discussion involving Roschier Partner Rainer Hilli, BrandWorxx CEO Jari Taipale and professional board members Sanna Suvanto-Harsaae and Anne Korkiakoski. Roschier Partner Tero Jormanainen acted as moderator.

Key takeaways

The brand’s impact on the financial performance of the company is significant. In transactions, several aspects are to be considered when evaluating the underlying business. However, the true value of a brand is not always realized, and, consequently, a brand may not reach its full potential at the time of the transaction.

Nevertheless, studies indicate that powerful brands significantly outperform the market, and brand-oriented companies double their profitability compared to those who do not manage brands as a systematic process. The role of brand management is therefore substantial in building a strong and profitable brand, which in turn affects the financial performance of the company.

Assessing and creating value for the brand increases its potential. The monetary brand valuation should be based on an assessment of financial, behavioral, and legal parameters, all of which are to be considered when forming an overall assessment of the brand’s monetary value. The enterprise value of a brand may be derived from a value-creation process, in which it is vital to identify issues in terms of legal protection and the costs involved. Costs of corrective measures, unnecessary maintenance costs, and other extra costs should also be considered.

Subsequently, corrective measures should be taken that will eventually increase the brand’s value and profitability. Eventually, the brand should have a higher value and profitability due to cost-efficiencies, the business risks should be lower, and the selling price should be higher.

The legal protection of a brand is a vital aspect of its value. In terms of bringing value to a brand, the most important form of legal protection is the registration of trademarks. From a geographical perspective, the registration of a trademark should, in general, cover all countries where the mark is being used. Otherwise, it may not be possible to use the trademark due to the prior trademark rights of a third party. Moreover, trademark registrations should cover all goods and services for which the mark is being used to ensure that the mark is adequately protected, and that trademark rights concerning all relevant goods and services can be enforced.

Implementing brand strategies and policies should be considered important. As studies indicate, delivering on brand promises is the biggest driver of customer retention in Finnish B2B, further emphasizing the importance of implementing brand strategies and policies within the company. Having a written IPR strategy and IPR specific policies is necessary to achieve as high an ROI as possible.

Without systematic registration and enforcement activities, limited protection is achieved and unnecessary enforcement costs may arise. Furthermore, there will be a high risk of infringement due to lack of freedom to operate searches, and there will be a higher risk of bad faith trademarks, domain names, and social media account registrations occurring due to inadequate process control relating to product or service launches.