View Print Friendly Version
Brand Management in the 21st Century–It’s the Brand–New Game.
© Cheryl Hodgson 2008 | Posted on June 4, 2008
Valuing trademarks and good will in company financial statements is more than Accounting 101. It may well be a fiduciary obligation for the officers.
So what if your business is not the size of McDonald’s, or likely to engage in scandals the likes of Enron. Why should you care about the need to accurately value good will as an asset of the business? More important, what actions must your company take to oversee and protect the stated value, particularly where outside investors are involved?
If protection of brands and the good will they represent is important enough for larger companies, it is equally important for emerging brand owners to protect and INSURE good will while building a valuable brand! Every company with a brand to protect must rethink the meaning of brand management in the 21st Century. Today, brands can be made and lost almost overnight. The old rules do not apply. It’s a brand new ball game; the game is risk management. It’s never too soon to have a sustainable company strategy to protect brands and good will. This includes taking simple steps to minimize the impact of outside events which can impact brand equity and value. (See this month’s E Zine Pop Quiz if you have any doubts).
One of our earlier posts discussed the notion that good will is a real asset, listed on the “balance sheet” of a company. Any “impairment” to value, namely damage or loss in value must be disclosed in annual audits, or representations must be made that nothing has happened in the previous year to impact the value assigned by accountants. This practice is based upon an accounting principle for private companies. Events such as loss of a registration, or an infringement claim or lawsuit that poses a risk to the stated value on the balance sheet must be disclosed under current accounting principles during outside audits. There are even greater risks from Internet cyber-squatters and dilution resulting from failure to police one’s marks.
With the passage of Sarbanes-Oxley following the Enron scandal, more stringent disclosures are now required by public companies. The CEO and CFO must certify the accuracy of the figures on the books, including the number assigned to intangibles such as good will. One country, Brazil, has gone so far as to pass legislation for larger companies requiring disclosure of the value of good will and intangible assets on the books. There is discussion of similar legislation in Great Britain.
For a a real life story, read on. You’ll think twice about protecting good will as a company asset. Failure to obtain proper advice in registering and maintaining valuable trademarks can lead to one of your most embarrassing, and costly moments.
Technorati Tags: brand equity, brand management, good will, Intellectual Property, Sarbanes Oxley, tradmarks
No Comments »