Global BV news: Machine tool brand values worldwide

BVWireIssue #167-3
August 17, 2016

When talking about brand value, most people do not think of special-purpose machinery. Still, not everything in this sector is about technical features alone; awareness and reputation are important success drivers. To understand more about the importance and value of special-purpose machinery brands, MARKABLES analyzed businesses in this industry. The peer group contains 24 different machine tool businesses including Schuler, Homag, Pentair, Müller-Weingarten, Thermadyne, and others from eight countries.

One word: plastics: The average valuation multiple of 1.0x revenues is not very high for technology businesses, indicating a stagnating market in a world where plastics and other materials are gaining ground against metal. The median trademark royalty rate is slightly above 1% on revenues (see chart below), and trademarks account for 10% of enterprise value on average. This is not much, but it’s more than for such seemingly brand-driven businesses such as computers (see the June 15, 2016, issue of BVWire).

The key takeaways of this peer group analysis are:

  • Trademark value correlates with business size. Specialized niche suppliers show higher brand values than larger multisegment multitechnology suppliers.
  • Machine tool businesses have a lot of repeat businesses from customers they know well. The value of customer relations is five times higher than trademark value.
  • Surprisingly, German machine tool suppliers have trademark value below average, despite the strong German engineering know-how. Maybe, German technology is better than their names.
  • Most machine tool brands are established, and their installed branded fleet will persist long into the future. Not surprisingly, the remaining useful lives of machine tool brands is much longer than for other technical equipment such as computers or communication equipment.

MARKABLES, based in Switzerland, now has a database of over 8,200 trademark valuations published in financial reporting documents of listed companies from all over the world. The database reports value solely for the use of trademarks (not bundled with other rights).

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