Brand Equity

The percentage ownership interest a shareholder holds in a company. Equity stakes determine voting rights, dividend entitlements, and the share of proceeds received in a sale or liquidation event.

The incremental return that investors require for holding equities over risk-free government bonds, reflecting the additional risk associated with equity ownership. The ERP is a critical input to cost of equity estimation under both CAPM and build-up methods.

Investment capital provided to companies that are not listed on a public stock exchange, or used to take public companies private. PE firms typically acquire controlling stakes in mature businesses, apply operational improvements, and seek exits within 3-7 years.

A style of private equity investment focused on mature, profitable, or near-profitable companies seeking capital to accelerate expansion without ceding majority control. Growth equity investors typically target businesses with proven product-market fit and strong intangible asset bases, providing capital for scaling operations, entering new markets, or funding acquisitions.

The value attributable to the shareholders of a business after deducting all debt and debt-like obligations from enterprise value. Equity value represents what the owners would receive if the business were sold and all liabilities settled.

The ownership stake held by a company's founders, typically established at incorporation and subject to dilution through subsequent funding rounds. Founders' equity is usually subject to vesting schedules and may carry different rights from investor shares, reflecting the intangible contribution of the founding team's vision and early-stage effort.

Net income divided by shareholders' equity, measuring the return generated on owners' invested capital. High ROE can indicate efficient use of equity but should be interpreted alongside leverage levels and the quality of earnings.

The intangible value derived from a company's standing in the market, encompassing trust, credibility, thought leadership, and public perception. Reputation capital influences customer acquisition, talent attraction, partnership opportunities, and the ability to command premium pricing.

How much of a company's value is intangible?

For S&P 500 companies, over 90% of market capitalisation is attributed to intangible assets. For typical SMEs, the proportion ranges from 50-85% depending on the industry and business model.

What are the main types of intangible assets?

The seven main categories are: technology and IP, customer relationships, brand and marketing, human capital, data assets, contractual rights, and artistic/creative assets.

How do you value a brand and what factors drive brand worth?

Brand value is driven by pricing premium, customer loyalty, and market position. Valuation methods include comparable company analysis, price premium multipliers, and income approach based on branded revenue.