Intragroup transfer of intangible assets
Expertise : Litigation
- A global leader in consumer products wished to transfer a basket of intangible assets (brand names) of great value to another subsidiary of the group, and then set up a usage fee system for the use of these brand names.
- The conduct of this operation should be assessed according to the brand valuation (which created a taxable added value) and the level and structure of the usage fee to be imposed.
The methodology used for valuing the brands included:
- A simulation of the market operations to measure the added value created by the brand (price premium and volume effect),
- A Monte Carlo type cost model that established a confidence interval of the valuation taking into account the effects of many parameters that may have an impact on the value,
- A configurable model that calculate the impact of the usage fees on taxable income of all subsidiaries of the group.
Benefits and results
- The model enabled the management of the group to test many scenarios in order to estimate risk and profitability.
- The results from the model led the group to abandon the decision to transfer the brands, contrary to their initial strategy.
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- Defending the policy of intra-group financing and the development of a complex financial product
- Arbitration between British Telecom and Vivendi on the Vizzavi portal
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