"Mergers, Demergers or Reverse Mergers are resorted to enhance, utilise or protect the brand value already earned by an enterprise". Explain how the reputation and goodwill associated with a brand name of the Company cou

CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · June 2018
"Mergers, Demergers or Reverse Mergers are resorted to enhance, utilise or protect the brand value already earned by an enterprise". Explain how the reputation and goodwill associated with a brand name of the Company could be advantageously exploited.

Answer & Explanation:

Acquiring a new product is different from acquiring a brand name. Same is the case to get rid of a product that adversely affects the brand name. At times symbols are sold to generate sufficient funds. Citibank sold the umbrella look symbol. Hotmail, WhatsApp are also one sort of brands that are sold for hefty amounts. In a related field companies think of introducing another product so that reputation and goodwill associated with a brand name could be advantageously exploited. The combination of the ability of the company to take over the manufacturing facility and build the said product with the company's brand name develops a great market for the company. Brands/marks are a class of assets like human resource, knowledge, etc. They create a value premium for the goods and services. Mergers and acquisitions help utilize or protect the brand value already earned by an enterprise. For example, Tata Motors acquired Jaguar and Land Rover British motor car brands to exploit automobiles market worldwide.

Topics: Corporate Restructuring

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