Advising pre-IPO negotiations over ownership and control of a brand
Prior to its IPO, a logistics brand’s CEO and management team came to Interbrand for help with a unique challenge – it shared control over its brand name and key visual brand assets with a third party who could technically revoke their usage.
As the IPO approached, the company had entered into negotiations with the third party to clarify ownership of the brand and ensure complete security over its future use. Interbrand was asked to analyze five assertions at the heart of the negotiations:
- Trust (among customers, general public, and employees) in the brand was high and the brand was highly distinctive of the business.
- The brand was a business asset with significant value, which made a sizable contribution to the company’s business performance
- Rebranding the business would be expensive (especially with time constraints)
- Rebranding could result in the loss of customer goodwill and loyalty (i.e. potential loss of business value)
- Uncertainty in the ownership of the brand would introduce risk, potentially undermining the value of the business on IPO.
A particular challenge was the modeling of potential business value at risk should control over the brand be lost (i.e. requiring a full rebrand). To adequately assess the level of risk, we devised three potential scenarios, leveraging rebranding case studies, an analysis of the strength of the brand and how it worked to influence customer purchase decisions, together with an understanding of the business model as well as industry and competitive trends. Working closely with the brand’s finance team, Interbrand developed a range of scenarios for the potential business value at risk.
Due to their sensitivity – and given the imminent IPO and the importance of the negotiations, the valuation analysis and findings were rigorously scrutinized by the brand’s senior management. Our analysis played a pivotal role in supporting the brand’s claim to full ownership control, and the CEO used our report to help support the company’s position during the negotiations. From a business perspective, the IPO was successful and one of the most heavily subscribed listings of the year.