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Brand Securitization

In: The Economy of Brands

Author

Listed:
  • Jan Lindemann

Abstract

The asset value of brands is increasingly used to raise debt financing for a wide range of financial transactions. A key tool for this purpose is securitization. This is a structured financial process that involves the repackaging of cash-flow-producing assets into securities, which are then sold to investors. The securitization of intangible assets such as brands has evolved into an established corporate financing tool used to facilitate M&A, stock buy-backs, and risk transference to investors. As companies recognized that intangibles assets constituted a main portion of their corporate wealth their desire to use them like their tangible assets for financing increased. Chapter 2 established that about two-thirds of business value can be attributed to intangible assets. The total asset value of global intellectual property is estimated to be between US$4 trillion and US$7 trillion. In 2008, intellectual property (IP) licensing revenue worldwide exceeded US$500 billion (compared with an estimated US$18 billion for 1990). For example, IBM alone receives between US$ 1.5 billion and US$2 billion in annual licensing revenue. In addition, due to new worldwide accounting standards on the treatment of intangible assets their visibility has increased significantly.1

Suggested Citation

  • Jan Lindemann, 2010. "Brand Securitization," Palgrave Macmillan Books, in: The Economy of Brands, chapter 0, pages 87-90, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-27501-0_10
    DOI: 10.1057/9780230275010_10
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