When is the Greenfield method applicable?
Short Answer
The Greenfield method models what it would cost to build the business from scratch using only the subject intangible asset, estimating years to profitability and required investment.
Full Explanation
The Greenfield method is used when you want to value a specific asset's contribution to building a business. Example: valuing a trademark — estimate how much capital and time it would take to build a £10M business using that trademark (vs. building it without the trademark, or using a generic name). Steps: 1) Project revenues that could be achieved using the asset (based on market size and penetration), 2) Estimate costs (development, marketing, operations), 3) Model years to profitability, 4) Calculate required investment and capital costs, 5) Compare to a greenfield scenario without the asset (slower ramp, lower ceiling). Greenfield is particularly useful for brand valuation: how much revenue uplift does the brand provide vs. a generic alternative? A strong brand might achieve profitability in year 3 with £5M investment; a generic brand might require 5 years and £10M. The Greenfield difference (2 years faster, £5M cheaper) approximately reflects brand value. Limitations: Greenfield assumptions are speculative (build forecasts, capital needs, timeframes) and sensitive to changes. Used in conjunction with other methods for triangulation. Opagio uses Greenfield for brand and trademark valuations in growth-stage companies.
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