Trademark Valuation Multiples

Project / Case Reference Samples
Retrieval Date February 23, 2017
MARKABLES ID 26100
valuing / reporting entity International Consolidated Airlines Group, SA
year 2011
headquartered in Spain currency EURO (EUR) million
reason for valuation PPA - share deal valuation concept fair value
company / business / brand
Iberia Líneas Aéreas de España, S.A. Operadora (Iberia)
main activities transportation; airline
home country Spain business territory international
description Iberia Lineas Aereas de Espana SA (Iberia), together with its subsidiaries, provides air transportation of passengers and cargo on routes worldwide, between Spain and Europe, and between Europe and Latin America. The company also offers aircraft maintenance services, including inspections and repairs of airframes, aircraft engines, and components; and handling services in airports, such as servicing aircraft, handling baggage, and serving passengers. In addition, it provides IT and telecommunications services, and technical assistance services, such as IT systems development processes, maintenance of IT systems and data processing centre, user care and support, and management of procurement of IT products and services. The company was founded in 1927 and is based in Madrid, Spain. Since 2011 and as a result of the merger between British Airways and Iberia, Iberia Lineas Aereas de Espana SA operates as a subsidiary of International Consolidated Airlines Group, S.A. With more than 80 years of history, Iberia is the Spain's largest air transport group and the fourth-largest in Europe. It is also the leading airline on routes between Spain and Latin America, flying almost daily to 18 destinations in the region. The airline flies to 102 destinations in 37 countries and serves 193 destinations through codeshare partners. At the end of December 2011, Iberia had a fleet of 103 aircraft in service. Iberia’s hub is located in Barajas, the main airport serving Madrid and Spain which has been designed to handle 70 million passengers annually. Iberia operates out of the newest terminal at the airport, Terminal 4, which was inaugurated in February 2006 and is one of the world’s largest airport terminals. Iberia is a founding member of oneworld, the alliance of airlines around the globe, which together serves some 800 destinations in 150 countries. The breakdown of Iberia’s 2010 revenues is 37% from long haul passenger, 18% from medium haul passenger, 14% from domestic passenger, 5% from other passenger, 6% from cargo, 7% from maintenance, and other (handling, booking systems, commissions, etc.) In 2010, to meet the requirements of its merger with British Airways, Iberia made a valuation of its brand based on the Relief from Royalty method, which values the revenues that the proprietor of the brand would obtain from licensing it to a third party, obtaining a result of €212 million at 30 June 2010. In the PPA performed after the merger in 2011, the final value allocated to the Iberia brand was €306 million.
trademark value EUR 306 million trademark useful lifetime in years indefinite
trademark revenues EUR 4,856 million (revenues from sales of products or services)
profit EUR 493 million (EBITDA)
trademark royalty rate as reported 0.64%
customer value EUR 253 million
value of other intangible assets EUR 518 million
goodwill EUR 249 million
tangible assets EUR 5,653 million
enterprise value debt-free EUR 2,490 million total assets EUR 6,979 million
comments customer value relates to the Avios loyalty programme (formerly AirMiles); royalty rate used in initial trademark valuation as reported in annual report 2011
enterprise value multiples
enterprise value / revenues 0.51x enterpise value / profit 5.05x (EBITDA)
trademark in relation to other assets enterprise value = 100% total assets = 100%
trademark / brand (indefinite) 12.3% 4.4%
customer relations (10 years) 10.2% 3.6%
other intangible assets 20.8% 7.4%
goodwill 10.0% 3.6%
tangible assets 227.0% 81.0%
(total) (280%)
100% 100%
trademark multiples – revenue based
trademark value / revenues in % 6.3% reported royalty rate0.64%
trademark multiples – profit based
trademark profit split 2) 12.3%
valuation parameters
reported discount rate 10% reported growth rate 2.5%
corporate tax rate (Spain) 30%
1) implied royalty rates Implied royalty rates must not be confounded with reported or effective royalty rates. Implied royalty rates are hypothetical rates which the appraiser might have applied under certain likely assumptions to arrive at the reported trademark value. Such assumptions include revenue growth rates, discount rates, and tax rates. MARKABLES calculates implied royalty rates in a cautious and in an optimistic scenario, by applying different assumptions of discount rates and growth rates to future revenues. These two scenarios represent the first and third quartile range of assumptive valuation parameters typically observed in PPAs and trademark valuations.
For a detailed explanation of implied royalty rates, please go to the glossary page on www.markables.net. The link to the glossary is on the top right in any of your project folders.
2) trademark profit split The profit split is an approximation of the part of the overall future profit of the business that must be generated from the trademark asset.
For a detailed explanation of the trademark profit split, please go to the glossary page on www.markables.net. The link to the glossary is on the top right in any of your project folders.