Supporting the recapitalization of a well-known retail bank

A Well Known Retail Bank

Office: London

A UK bank approached us in the aftermath of a significant acquisition that had gone sour and was threatening the very existence of the business and brand. A number of recapitalization options were being considered, one of which involved the bank’s ultimate owner injecting approximately £1bn into the bank. Part of this proposed deal involved transferring the bank’s trademarks to its owner. The owner would then license the trademarks back to the bank in perpetuity on a royalty free basis. Interbrand was engaged to assess the fair market value of the trademarks.

We worked closely with senior management, within extremely tight timelines, to conduct the valuation. We also conducted an indicative valuation of the banking business operating under the brand and compared this value to the value of the trademarks as a ‘reasonableness’ check. Due to the nature of the transaction, the trademarks were valued using the royalty relief methodology, which assumes the trademarks will be licensed, as was to be the case in this situation.

Assessing the competitive strength of the brand using Interbrand’s Brand Strength framework helped to inform the royalty rate used for the valuation and highlighted areas of improvement for the brand.

In order to answer specific questions from the owner’s legal team, we also valued the trademarks using a range of alternative scenarios, based on the likely value to different types of buyers and under a range of potential uses for the trademarks.

Our valuation report was delivered to senior stakeholders (including finance and marketing teams) at the bank, and our analysis and findings were accepted without adjustment. The valuation supported the recapitalization negotiations, which were successfully concluded with a total of £1.5bn of Tier 1 capital ultimately being injected into the business.