Valuing Brands in the Tech Sector Using an Apportionment Framework
In 2017, a Villanova University business professor posited that there would be only 30 technology companies in 2030, 10 in 2050—and then none.1 In a sector defined by consolidation, the tech companies that have survived in competitive markets have become household names, with brand assets that contribute to their financial performance and valuation. !ese companies often have two types of valuable brands—their corporate brand name and their product brands—both contributing to performance and value in different ways at different times in the company’s evolution.
Tech leaders do not want to spend a dollar less than they should—or more than they have to—on marketing. Not only
can brand valuation inform the allocation of these precious financial resources, it can also provide insight into the financial contribution of each brand asset.
To develop an accurate and meaningful brand valuation for a tech company, valuation analysts need to consider earnings based valuation approaches, understand the interconnection of technology and brand assets, and deploy various analytical tools to uncover important information that is not always obvious. In this article, we present a case study to illustrate the use of a profit apportionment analysis to quantify the financial contributions of the subject company’s brands.
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