Intragroup transfer of intangible assets
Transfering intangible assets of leading consumer products (FMCG)
Business challenge
A world leader in consumer goods wanted to transfer a portfolio of intangible assets (brands) to a group subsidiary, and then establish a brand licencing system.
This mission entailed valuing the brands (creating taxable capital gains), as well as determining the level and structure of the license fees.
Approach
The method used to value the brands included:
- Simulating the market, measuring the brand premium (price premium and volume);
- Using a Monte Carlo type cost model to establish a confidence interval of the valuation and accounting for parameters with an impact on the value,
- Designing a model to calculate the impact of the fees on taxable income of all group subsidiaries.
Benefits and result
The model helped group management to test a number of scenarios to appreciate the risk-level and profitability.
The results of the model led the group to abandon the decision to transfer the brands, contrary to their initial strategy.
Expertise:
Reports – Impact study
Client:
Consumer products
