We have watched with intrigue at the brand auction that has taken place across the pond carried out by Racebrook Marketing Concepts on behalf of Michael Reich, CEO of Brands USA Holdings (reported here by the New York Times). It is perhaps critical to note that what was actually being sold were royalty free, fully paid, exclusive licenses (that bidders were told can be turned into full ownership when a Statement of Use is filed) rather than trade marks themselves. In other words the seller does not own the given trade mark (as pointed out in the linked New York Times article) but effectively a right in a trademark application.
Whilst we might be tempted to stand up and applaud Mr Reich for this ingenious method of turning a profit (we will assume) from the sale of such rights, we should be clear that there are other more lucrative methods that those who own brands (be it corporates with unused non-core product brands or orphan brands searching for a home after a merger or acquisition) can sell them.
Here at Metis Partners we have had significant success selling brands for our clients in the form of impressive returns. A recent notable success was the sale of the MFI brand (to be precise this was the sale of various MFI related trade marks and domain names out of insolvency) for £250,000. However, it is not just household names that are capable of achieving significant returns as a sale of lesser known brands this year such as Powwow Water (previously a Nestle Water brand) and Kshocolat (a premium chocolate brand) have proved.
Metis Partners believes that when selling a brand, there are two main focuses. Broadly speaking this can be summed up as – “selling the right stuff to the right people”: Selling the right stuff: As much data as possible must be gathered on the brand and the related assets as possible. Whilst the legal aspects are important here, it is essential to focus on the commercial value add and this is achieved by asking the question – what information would I want and what assets would I want to acquire if I were the buyer (baring in mind that not all buyers are the same)? To this end - are there other assets apart from trade marks that can be sold? Domain names, as Mr Reich/ Racebrook realised (domains were purportedly included in every sale) are a good starting point, but there may be less obvious assets that are capable of being sold: product packaging, website content, databases and unregistered rights in logo’s to name a few. These all add value and will ensure that as high a price as possible is sought.
Sell to the right people in the right way: Branding is all about perception and beauty is very much in the eye of the beholder. In order to achieve the best return possible the brand must be marketed to the right people. To do this, Metis Partners both spreads the net wide by using its international network of contacts but also focus on the specific market by carrying out market research and analyses and asking the simple question – who would this brand be valuable to?
Coming back to Mr Reich and Racebrook: Did they sell the right stuff? Arguably not given that the trade marks themselves were not sold, and bar the domain names, it does not seem as though any other collateral was sold. Importantly it does not appear as though the “story of the brand” was narrated either.
Did they sell to the right people in the right way? Again, arguably not. They seemed to rely heavily on, as Neil Wilkof’s article states –“media hype” and it is hard to belive that Racebrook carried out the kind of focussed marketing required to attain best value given that 150 brands were up for sale on a single day.
In summary, selling brands via the auction route is perhaps best suited to selling many brands where either time or resource is limited but it is undoubtedly not the manner through which to gain the best price. To do this as we have shown the focus must be on selling the right stuff to the right people.
