Module V· Identifiable Intangibles in PPAIntermediate
Question

How do you value a brand in PPA using the relief-from-royalty method?

Answer

Relief-from-royalty values a brand by estimating the royalties the company avoids paying because it owns the brand. Forecast branded revenue, apply an appropriate royalty rate, tax-effect the royalty savings, and discount them to present value. The key assumptions are brand-specific revenue, royalty benchmark, useful life, tax rate, and discount rate.