Transforming Brand Equity Into Enterprise Value

Fractional Futures is the essential podcast for CEOs, investors, and senior marketing executives looking to unlock the power of fractional marketing leadership.
 
Hosted by Paul Mills, Founder at VCMO, and with special guests, we'll share expert insights, provide actionable strategies and explore real-world success stories to help you leverage fractional marketing leadership for maximum impact.

In this episode

In this episode of Fractional Futures, Paul Mills and Rob Nicholls discuss the critical role of brand equity in driving business success. They explore how brand equity impacts business valuation, the importance of strategic rebranding, and the challenges of measuring the financial impact of branding initiatives. Rob shares insights from his extensive experience in finance, emphasizing that brand equity is a long-term investment that can significantly enhance customer loyalty, pricing power, and overall enterprise value. The conversation highlights the need for businesses to recognize the intangible value of their brands and to approach rebranding with a clear strategy focused on measurable outcomes.

Special Guest

Rob Nicholls, Founder Rob Nicholls Consulting, CFO, Board Advisor and Angel Investor

Key Takeaways

• Brand equity is a key contributor to customer loyalty and profitability.
• CFOs are increasingly recognizing the value of brand equity in business valuation.
• Rebranding should be approached strategically, focusing on long-term impact rather than aesthetics.
• Investing in brand equity can lead to higher pricing power and customer retention.
• Measuring the ROI of branding initiatives requires a long-term perspective.
• Brand equity is often intangible but has a significant financial impact.
• Successful rebranding can drive growth and attract investors.
• The modern marketer must act as a brand custodian to leverage brand power.
• Brand strategies should align with long-term business goals and market opportunities.
• Effective communication of brand value is essential for gaining buy-in from stakeholders.

Sound Bites

"Brand equity impacts business valuation."

"Brand takes time to develop."

"CFOs are recognizing the value of brand equity."

"Brand power can command a pricing premium."

"Rebranding must deliver long-term financial impact."

"Investing in brand can increase enterprise value."

Contact VCMO

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• Email us at hi@vcmo.uk
• Visit our website vcmo.uk
• Phone us +44 (0) 331 630 9395

Thanks for listening & keep podcasting!

Fractional Marketing Leadership | Marketing Transformed.

Chapters

• 0:10 Introduction & Rob Nicholls
• 1:29 Brand Equity as a Business Asset
• 4:25 How Investors See Brand Equity
• 6:27 Creating Brand Value Over the Long-Term
• 8:41 Graham Robertson of Beloved Brands
• 9:32 Brand on the Balance Sheet
• 10:34 Rebranding for Growth
• 11:10 Measuring the Financial Impact of a Rebrand
• 14:29 Brand as an Investment
• 15:29 Triggers for Rebranding
• 20:27 Brand Considerations During M&A
• 22:27 Measuring Brand Equity Impact
• 26:59 How Brand Equity Can Impact Company Valuations
• 32:12 Rebrand to Attract Buyers
• 33:19 Wrap Up & Close

Transcript

Paul Mills (00:01.902)

Hello and welcome to another episode of Fractional Futures, where in this season we're exploring how fractional CMOs can help SMEs and portfolio companies accelerate growth and maximize enterprise value. Today we're going to be discussing one of the most understood yet powerful drivers of business success and that's brand equity. A strong brand is more than just a marketing asset, it's a key contributor to customer loyalty, conducting pricing power and also long-term profitability.

In this episode, we'll be exploring how brand equity impacts business valuation, when to consider rebranding to support growth, and how to measure the financial impact of branding initiatives. Joining me today is Rob Nicholls, a strategic CFO, a non-exec director, and a board advisor with over 35 years of global finance experience. Rob specializes in profit maximization and value creation. And today he'll be sharing his insights on why CFOs are increasingly recognizing

value of brand equity. Hi Rob, welcome to the show.

Rob Nicholls (01:05.659)

Nice to see you, Paul.

Paul Mills (01:07.064)

What have you been up to recently? Anything exciting? Any news?

Rob Nicholls (01:11.537)

A little bit of travelling, a little bit of travelling, a little bit of golf. The weather's getting better, we're getting out there a little bit more as well, so all good.

Paul Mills (01:18.818)

Has your handicap improved? No, it's getting bit lighter and warmer? No?

Rob Nicholls (01:21.199)

Not really. The objective this year is to drop two strokes. That would be good. I'll be happy with that.

Paul Mills (01:26.542)

Right, excellent. Well, fingers crossed and hopefully the spring is coming around the corner. I think this weekend it was quite mild to weather for this time of year. hopefully, yeah.

Rob Nicholls (01:36.657)

We're going to wait a little while for Easter, haven't we? Another couple of weeks for Easter. All good.

Paul Mills (01:41.538)

Good stuff. Anyway, well, let's jump into the first topic. I want to, you know, explore how brands can be a strategic asset, an asset. Sorry, I'll start that again, Rob. So let's jump into the first topic where I want to explore how brand can be a strategic asset for a company. Now, a strong brand is more than just a logo. It's an asset that drives revenue growth, customer loyalty, and enterprise value.

I want to explore how brand building can increase profitability and attract the right investors and ultimately customers. So Rob, from your financial perspective, how do you evaluate brand equity as an asset? And what role does it play when assessing a portfolio company's valuation for investors or stakeholders?

Rob Nicholls (02:31.791)

The difficulty I think we have with brand and brand strategy and the value of brand is it takes time to accrete or develop, if you will. It'll take sometimes months and certainly years to develop. That's difficult for lot of people, a lot of traditional finance directors, perhaps, to value, if you will. think that's the dilemma for a lot of finance directors, if you will, is finance directors tend to be more

inwardly focused, more backward focused around reporting, delivering the numbers. A chief financial officer really is forward thinking. It's looking at where the business is going, where the market is going, and where value can be created. A big driver of that, and I as a CFO recognize that, is around brand. The important thing to recognize, I think, with brand is it takes time. You're not going to spend $20,000 this month and create

an improvement on customer retention, new customer growth, and better pricing in the next quarter. It's going to take several quarters and, in some cases, several years. That's an investment over time that is difficult to justify sometimes to a board, to a CEO, to a CFO even because it will take time. The other thing is it's intangible. It's not something… I can't touch and feel it like a new building.

or in a new vehicle fleet, if you will. That's the intangible asset. But to be honest, today, most highly valued businesses have a tangible brand that you can't touch and feel, but has value in the marketplace that brings clients to the business, that perhaps enables premium pricing. And that truly is valued. And you can see that readily in

in the public markets, if you will. The same goes for the private markets. If you've got a public brand that has value in the marketplace, the business tends to be highly valued in the same way that you can have a private company with a strong brand in a strong industry or strong product or service that will be highly valued by investors. If you're creating a brand that has traction,

Rob Nicholls (04:54.171)

has resonance in the marketplace and that maybe is only a regional brand that you want to take nationally perhaps or even regionally, investors will look at that brand and that creation of brand equity and they will value it accordingly. Valuations of companies aren't just multiples of EBITDA or a multiple of sales. They will also ascribe value to the brand.

that they'll understand through their due diligence, through talking to customers, through talking to industry context, they will evaluate the value of that brand in the marketplace. And quite often you'll find that a business that might sell for 15 or 20 million pounds, you'll often find that there are very few assets other than sales, maybe a client list and a brand. And that brand does

equate to a significant amount of value. And investors see that, acquirers will see that. And I think the boards today, CEOs, CFOs, and the board will recognize that if you're creating value, you're increasing the overall enterprise value of the business. And brand has a big part to play in that. And I still don't think it's probably fully recognized.

Paul Mills (06:14.902)

Absolutely. I think, you know, certainly a lot of marketing leaders when they're tasked with a brand project or brand activity, a lot of it is focused on the brand identity, changing the fonts, changing the colors, maybe changing the logo, which is visual identity. That doesn't really add pound signs. It doesn't increase EBITDA. It doesn't increase enterprise value. But I think certainly Where a strong brand is recognized,

If a strong brand, if it drives demand, if it drives word of mouth referrals, you can use it to lower customer acquisition costs. That's what boosts the profitability. And I think certainly, you know, the modern marketer needs to be thinking as a brand's custodian, how can I leverage the brand that we have? How can we make it stronger? How can we draw more eyes onto it? How can we create brand power? A term to, you know,

it enables us to increase our pricing, it enables us to retain customers because we're such a strong brand, they don't want to switch to competitors because our offering is giving them so much value, but for a price that they're happy to pay. And you're absolutely right, that in the eyes of an investor, it's a more attractive brands to invest in, or for other businesses to acquire the business because you're potentially an attractive business to acquire.

Rob Nicholls (07:43.218)

I have a couple of brand strategies in my network that I work with some really, really good people as well that can develop kick-ass brand strategies that they can talk to the values and the nomenclatures that CEO and the CFO wants to talk about long-term value creation, incremental clients, incremental pricing over the longer term. And that's what it's all about really. It's about creating value over the long term.

really looking at brand strategy and saying, what's going to do for my sales this quarter or even next quarter? It's over the next three to five years, five to seven years. Is it going to be part of the value creation within the business? Is it going to lead to more individual clients, more customer wins, higher conversion rates, longer retention of clients within the business? Do they feel good about doing business with

the company or the product and service we offer. It's not really widely understood, I would suggest, because most managing directors or CEOs, they often haven't studied marketing. They don't understand the value of marketing. They don't understand the value that can be built and created through a strong brand strategy. I don't think brand strategists, to be honest, do a very good job of selling what a brand strategy is.

and how it can generate incremental sales, incremental client opportunities, more partnership opportunities, better pricing, and therefore better margins by profitability and therefore value creation. I really don't think brand strategists do a very good job. They work in their own little world or their sandbox, if you will. The best ones do see the bigger picture, what the opportunity is.

and they speak the language of the client in terms of what the client is looking for. And it really isn't about colors or fonts. I think we've moved past that and the brand strategists that think it is, they're gonna be left behind.

Paul Mills (09:57.972)

Absolutely. I want to give a shout out to a brand strategist who is, I think, world class at doing this, and that's Graham Robertson, who's the founder of Beloved Brands. And he talks very much around generating brand power. The brand's custodian, their focus is to generate brand power. So by having brand power, you can command a pricing premium. You can create more bargaining power in the supply chain.

You can attract partnership opportunities where you can lower customer acquisition costs. all this kind of good stuff. And that's really where an investor, the CFO will see or start seeing the value of the brand is through lowering costs, but increasing lifetime value, average order value, that kind of stuff.

Yeah, so definitely If you're listening or watching this, give Graham Robertson a look him up on LinkedIn, have a look at beloved brands because he does a fantastic job of explaining how to create brand power.

Rob Nicholls (11:01.361)

You have to think about this as an investor as well. If I'm looking to acquire your business, what am I acquiring? It might be a contact list, a customer list, it might be potential sales going forward, but you're also really acquiring a brand. That brand, if I buy it, is going to sit on my balance sheet as goodwill. That goodwill is going to be…

depreciated over a period of time, 10, 15, 20 years potentially. There has to be long-term value in the brand and resonance in the marketplace because if you don't depreciate, it's just like buying a piece of plant, a factory. It's going to be depreciated over time and brand will be depreciated over time. We'll put an expense every quarter into the P &L.

So if you think about it that way, as an investor thinks about it, I think you'll be well, better placed anyway.

Paul Mills (12:03.466)

I want to move on now to the next topic, Rob, where I want to explore rebranding for growth. There's a lot of companies out there that all of a sudden they want to rebrand for no logical reason. It might be an ego thing. It might be, I want to rebrand because I want to rebrand. Or it might be I'm bored with the font or I'm bored with the color. want to jazz up how we look and, you know, to the customer.

Rebranding, it can be a powerful tool for driving growth, but only if it's done for the right reasons and with measurable results. And I want to break that down slightly. what does success look like? if you're...

If you're committed to a rebranding project, how does it deliver long-term financial impact? So Rob, in your experience, what are the financial operational factors that a company should evaluate before committing to a rebrand project? And how would you measure its success?

Rob Nicholls (13:07.921)

I think if we talk about a rebrand being more than just colors and fonts, if you will, it has to deliver. If I'm going to spend a hundred thousand pounds on a rebrand, it has to deliver incremental value to the stakeholders of the business. that's improved pricing, better margins, increased revenue, higher retention, longer retention, longer lifetime value of a client. And so it has to create something that has some sort of semi-permanence.

over a longer period of time. If I'm going to do a rebrand, I want to spend a decent sum of money. A rebrand isn't five to ten grand playing with numbers and some images, if you will. A rebrand is 50 to 100 to 250, that's maybe a six, nine month, maybe a 12 month project, if you will, that engages existing clients, potential clients internally.

all the stakeholders. You've got to do it properly. I was speaking with a recruiter a couple of weeks ago, and she's done a rebrand. She's done it all in-house, costing five grand or something. That's not a rebrand. That's just changing some fonts and doing some blogs, if you will. That's fine, and we'll see how that works out for them. I want to see a rebrand that actually brings manifest changes to the business, not in 30, 60, 90 days.

over one, two, three, five years. Whether that's a complete name change, whether that's a complete image reappraisal, whether that's a new pivot to a new marketplace, one of my clients works in the build environment and we're doing a big pivot into an area where we know there's a pot of money because it's government money and there'll be several billion dollars that will be available for our clients to go after.

So there's a rebrand to be done around focusing part of our business on that pot of money because we know it's there, we know our clients can get it and we need to move in that direction. So there's money to be spent there. So we're investing knowing that there's going to be a marketplace with resonance and with a pot of money there. And I don't think enough businesses do that. And you can do that whether you're turning over half a million

Rob Nicholls (15:31.748)

or 5 million or 50 million pounds a year. There's no restriction on that. I don't see UK businesses rebranding or having a brand strategy very often. If I work with 10 clients, maybe one or two of them will be cognizant of brand. Whereas I worked in the US for 25 years, most every business, small, large, or in between, they all had a brand strategy, whether it was documented or not.

likely they did, they will often have an external agency to work with their internal people. They take it seriously. It's taken very seriously brand and brand equity. That's why you'll find an awful lot more. Of the top 50 brands, probably 45 of them today are US-based brand because it's taken seriously. There's investment. We talked earlier about putting a percentage of sales into your marketing or spend, if you will.

It's the same with brand. You should be making a significant investment in brand because your clients will benefit from it, your pricing will benefit from it, and potential people or potential acquirers of your business, people who will value your business, will value that as well. Look at it upon, it's an investment. That's what it is. Brand is an investment. If your CFO is not recognizing that,

They're probably not a CFO. They're a finance controller or finance manager, perhaps, is assumed of the title. A true CFO will recognize that a brand strategy is an investment in the business. And it's not something that's going to generate tangible improvements or an inflection of sales or profitability in the next 30, 60, 90 days. But generally, over one, two, three years, there's going to be

attribution of value to the business.

Paul Mills (17:30.382)

I was interested in that story about that person, you know, who did their own DIY rebrands. And I think, you know, In my career as a marketer, that there's been a few companies or a few employers that wanted to do a rebrand purely for aesthetic reasons. And I said, don't do it because you're not going to, it's not going to deliver any long-term financial benefit at all. And I think a lot of business leaders need to understand

when a rebranding project should happen. And it's all about timing. The time to consider a rebrand, if you're entering a new market, so if it's a new market you're entering or customer segments, rebrands can help the company resonate better with its new audience. So if you're in the UK and you're going to China, for example, you might have to rebrand because...

your brand colors might offend the Chinese or the tone of voice or something like that. The other trigger, I guess, for rebranding is competitive differentiation. So if your competitors are gaining a market share over your company.

A rebrand can help you reposition yourself in the market, regain your competitive edge. The other trigger point, and one of my clients is considering this at the moment, is a merger and acquisition. So if you're an organization and your growth strategy is buy and build, if you're acquiring these new sub brands, you might want to consider what brand architecture you go with. Do you have a unified brand that all the sub brands are part of one?

Or do you have a house of cards architecture where they all remain as independent brands and that brings its own challenges as well. But, know, having multiple brands as that house of cards, it might confuse the market. So again, you need to think about the market impact both for the customers and potential investors. And the other trigger point, of course, is brand fatigue. If we look at Jaguar recently, there's been a lot of noise about Jaguar and that's

Paul Mills (19:37.848)

probably one of the most obvious brands at the moment going through a big rebrand. And I think this brand fatigue or negative brand perception is quite true of Jaguar at the moment. There's a lot of,

heritage and goodwill thought of Jaguar, but it's completely tearing up the rule book. It's coming up with a completely different product. It's completely repositioning itself in the market because there is that brand fatigue. So I think if your business, if it's not facing brand fatigue, if you're not going to new markets, if your competitors aren't stealing market share from you, there's no need to rebrand. If you're just going to do it for changing your name or changing the colors or having better pictures on your website, just don't do it.

dumb thing to do.

Rob Nicholls (20:23.707)

It's an interesting one. In January, a case in point, there'll be half the case studies on that for years to come. I'm a big believer in the acquiring sub-brands, if you will. I call them, we used to have a strategy called string of pearls. And you basically add a new business, which would be a new brand, as a sub-brand, and then investing in that. I think there's a lot of value in that. think a lot of, anytime you acquire something and then just suddenly strip the brand and integrate it in and bolt it on,

and give it the master brand. I think there's an awful lot of brand equity or goodwill that's lost. So I'm a big believer in, if you acquire a business, and one of my businesses was acquired a year before last, and the acquirer did a smart thing, is that they didn't really touch the brand. So it's just a sub-brand. There's an umbrella organization that owns the sub-brand that we sold the business to them, and that's worked very, very well.

a lot of opportunities to partner, but they're really hands-off. We do a quarterly board meeting where we basically report, a self-inventory direction report, what happened, what the numbers are, what we're trying to do, and they're very hands-off. That model works very well. I'm a big believer in that, what I call, string of pearls approach. The acquirer in this case, they've acquired probably three to four other businesses over last five years.

worked very well and they will retain their own sub-brand and invest in that sub-brand. There's value in that as well. Then there's the Jaguar approach.

Paul Mills (22:00.302)

Absolutely. Yeah. And I think that operating as those sub brands where they retain their independence, it brings advantages and it brings disadvantages as well. Because from a marketing perspective, it's more complicated to manage those multiple brands. You've got the cultural piece as well. All of sudden, if you've got four or five brands, you've got four or five different cultures. So organizationally,

How do you manage that? I think the other thing as well is whenever you're going through an M&A process and when you're deciding on the right brand architecture approach, whether it's house of cards, unified sub brands, whatever, you need to be thinking five, 10 years down the line because that sub brand you've just acquired.

What if you want to divest that sometime in the future? So if you bring in a brand and you put that under a unified brand, if it doesn't work out, if you want to sell it, it might be harder to sell if you didn't retain it as its own original brand. you need to think, again, brand architecture, brand strategy, it's more than just colors and names and stuff like that. It's really about what is the future strategy of the business.

If the owners want to sell out 10 years down the line, what's the impact of that? If you want to the best part of the brand, what's the impact of that? It's a really interesting place to play. If you approach it in wrong way, you can jeopardize quite a lot.

Rob Nicholls (23:28.529)

There's a lot of value to be created as an investor. I'm very keenly looking at the acquisition strategy. If I'm looking to buy companies, I'm buying the brand. An awful lot of what I'm buying is the brand and the senior leadership. I will retain the senior leadership for two or three years of earn-out, but the brand is going to be there when those leaders have gone. It's what I'm buying.

Does it have longevity? Have we done the due diligence? Does the brand have resonance in the marketplace? Can you take that brand to other places? So it's a fascinating world. And I think it's something that's undervalued is acquiring sub brands and investing in those sub brands, but equally the long-term approach. You have to be, as you say, you might acquire a business next year, but in 10 years time, you may look to spin it out because maybe the business has grown substantially.

Maybe they've pivoted some time. Maybe the management team that you put in that business wants to go off and do their own thing, and there's value to be created there. That absolutely should be invested. One thing I wanted to go back to is a lot of this is a zero-sum game. Being on the board, CFO, CEO of the board, they're allocating capital. The more brands you've got, if you've got 100,000 pounds to invest, you've got 10 brands, you've got to share the money around.

Whereas, if you've only got two brands, each brand is going to get a lot more investment. The decision is capital allocation. The more brands you have, the more sub-brands you have, the less money is going to be available to that brand. Oftentimes, a better alternative is if you've got $100,000 to spend, spend it on one brand, then spreading it too thinly. It's all about capital allocation and making the right decisions.

with the capital that you've got to be able to allocate.

Paul Mills (25:28.13)

That's probably a good segue into the next topic really is measuring brand equity impact. So You mentioned earlier Rob that brand equity is often intangible.

But the financial impact is very real. If the power of your brand is driving more customers your way, if you're managing to increase your pricing premium, if you're able to increase the lifetime value that you're getting from your customers. So I want to explore now how to measure the ROI of branding initiatives, because it is a hard thing to do. And so from a CFO's perspective, when working with

the CMO or the marketing leader, what financial metrics are you looking at to determine whether the brand investment is translating into tangible business outcomes?

Rob Nicholls (26:22.321)

I mean, in the US, I worked with a number of hoteliers and I worked with one private hotel group and we worked together. We acquired a number of hotels and then rebranded them. Now, the interesting thing was that they took a very long term approach. They took a three to five year distribution approach. So they weren't really looking for pricing to kick in straight away, although it often did.

You can take a $100 hotel and rebrand it as a $300 hotel, but that will take time to get occupancy up as well. In that case, that was about average revenue per key. You acquire the hotel for 100,000, 150,000 pounds, you can rebrand the hotel, and suddenly that key, that room effectively, is going to generate $450,000 worth of revenue as well. That is a tangible manifest

incremental inflection point. Now, it may not happen immediately. In the case of hotels, often it does happen. You can put your room rates up literally the next day. Not a lot of businesses operate that way. I think there's a fatal flaw in that there's an expectation from the board, effectively, sometimes, is that it will have an immediate impact. I don't think that's the case. I think in a lot of cases, you'll find

whether it's a product or a service, whether it's an accounting firm rebranding, there won't be an inflection point in the next quarter. You won't see a significant uptick in new client opportunities, a higher conversion rate, a higher rate. It will take time to attribute. I think a two- or three-year timeline will often be a good timeline to look at.

You have to have some key metrics. I think the one that always resonates with me is sales or revenue per employee. If we've got 100 employees and we're £100,000 worth of revenue, that's a revenue per employee ratio that maybe is a baseline. If you're growing as an organization, you may be bringing on 10%, 15 % of additional staff every year, every other year perhaps.

Rob Nicholls (28:41.265)

you need to have the metrics that look at that P KPI that is growing. Over time, sales per employee should be growing every quarter, certainly every year. If you're running six or eight distribution sites, if you're going to increase them by two and you're going to increase your sites by say 20 to 25%, you need to see a material inflection of

sales or revenue per site. So pick a number, whether it's employees or locations or distribution points, and pick that revenue point and make that the metric of choice and report on that internally and externally. So if the board says we want to look at revenue per hotel or per restaurant or per distribution point, fine.

of that same resonance inside, communicating that insight so that people on the team know that the senior leadership is looking at revenue per whatever that is and make sure it's communicated well. I worked with an organization that did not do that very well at all. So the board was working on revenue and profitability and pricing on a unit basis, and they weren't communicating anything at all internally.

the 50 or so people within the organization. They were just focused on their day-to-day job. They weren't really focused on the bigger, wider issue for the organization. For about two years, we're getting there now, slowly.

Paul Mills (30:22.338)

I think the other thing, the other metric you see if I can use, or maybe an investor is when Brand equity can directly impact the valuation of a business, particularly during an exit or an acquisition. think, you know, when I was in the corporate finance world for a short time, I could completely see when companies were being valued.

a lot of effort was spent looking at the brand, the brand equity, how attractive was it, what was the market pull? And that can add a few more multiples to the valuation price. So if your founder or co-founders are looking to exit, maybe a rebrand project before a sale can increase a multiple, which is obviously a good thing. But also if you're looking to be acquired by a bigger fish, again, it can...

increase your enterprise value as well. In terms of that happening, doesn't happen very often that you go for an &A transaction. with, I guess, the average tenure of a CMO being two years, maybe less now, building that brand value, it could take two or three years to really reposition a company ready for a

an acquisition or a merger or something. So how do you navigate that where maybe the tenure of the CMO is quite short, but the impact of their work might sort of, there might be a legacy there for an increase in valuation later on down the line.

Rob Nicholls (31:56.314)

It's good point. I'm with a client right now who have an expression of interest from a third party in Europe. We're at the moment trying to get our ducks in line, both financially and from a brand image, to basically juice the multiple. Whereas we might be able to do a transaction at three or four times sales, my objective is to try and get that to more like five or six times sales.

Right now, it's about pedal to the metal in terms of revenue, but it's about branding, and it's all those other things. They've got a good brand. It's about making sure that brand has the full investment. We've actually brought on board a freelance marketer to invest in that brand because the objective is, in the next probably 12 months, to get an expression of interest with a tangible, here's an offer.

from a third party. And the objective, the mindset as the CFO is I want my directors to generate a significantly higher multiple than they would have done two years ago. I've only been with them about two and a half years now. And it's all around putting the ducks in line, get a higher multiple because we know there's a transaction likely to take place in the next 18 months. And I'd rather they have

12 to 15 rather than 6 to 8 as a number to divide amongst themselves and go off and buy a boat and sail around the Mediterranean. My objective is to maximize that value. We're doing everything we can right now to invest in the brand, to make sure it has resonance in the marketplace, to make sure that customers really appreciate it to become the number one provider of that service.

in the UK, which is why we've got an expression of interest from a company in Europe. So really now it's about investment in the brand, making sure we get our ducks in line, both financially, sales, customers. Customers have great things to say about it, but it's about investment. And it does take time. It's taken two and half years to get to this point, and it'll probably take another year. So we'll probably be close to between three three and a half, four years.

Rob Nicholls (34:21.027)

of investment and getting things ready before transaction closes. So there's real tangible value to be had there. And it can make significant differences if you invest in brand at the right time. So I'm a strong believer in that. And I will continue to shovel money into the brand because I know that investors or potential acquirer will value that.

Paul Mills (34:50.136)

Yeah. And I think the modern marketing leader needs to be cognizant of that. And if you can demonstrate activities, ongoing activities, you know, year in year out that you're investing in the brands and not, not visual identity necessarily, generating brand power, brand equity across all these different factors you spoke about earlier. The sum of the parts when it does come to that M& A opportunity you've added.

additional multiples to that enterprise valuation, which is only a good thing. It's just hard to measure, you know, because it is very much a buyer will only pay what they think something's worth. So again, it's very subjective in terms of that hundred or 200 K rebrand project to position the business for those acquirers or whatever. It's hard to measure what the real outcome is until someone's actually put a value in or a bid.

Rob Nicholls (35:44.306)

Absolutely. I agree. It is difficult to measure, but the understanding is that you know that if you are investing in the brand, at some point, there will be a transaction or an opportunity to realize the value that you've created. It's intangible until such time as it is tangible, and there's an offer on the table. That number is $12 million and it's not $6 million. You know

The difference was, okay, we invested in these things, whether that's the brand, the overall brand strategy, whether we went after the right markets, understanding where the money is and making decisions to align the business to where that pot of money is, if you will. And I said earlier, we did a pivot within one of my businesses because we were confident there was a pot of money.

Paul Mills (36:33.987)

Yeah.

Rob Nicholls (36:41.199)

that was being provided by a government source that we knew our clients could go after. And so we basically rebranded and created a whole new sub-brand and rebranded the business to focus on that because we knew there was value there to be created.

Paul Mills (36:58.06)

Absolutely. And you never know, serendipity, you never know when a potential buyer is going to come chasing after your business. And if you haven't invested in the branch, they're going to offer you a much lower multiple. So that's the reason why you should continually invest in the branch, because you never know when someone is going to come and knock on the door and say, I'd like to buy you. And if you can maximize that potential, the better.

Rob Nicholls (37:09.489)

Absolutely. Absolutely.

Rob Nicholls (37:20.305)

It can be relatively low cost. You could spend a couple of hundred on the brand over a period of a year or two, and you will generate, I suspect, 10 or 20x the incremental value on a transaction if someone comes along. It will often make the difference because what are they buying? They're buying the people in the organization, the client list, but they're buying a big part of it. Sometimes 50%, 60 % of what they're buying is the brand.

So the more you invest in that brand, the more the value of the business, the overall enterprise value will potentially increase. It's not going to decrease, that's for sure.

Paul Mills (38:01.516)

That's probably a nice place to close this show, Rob. If you've been listening or watching to this episode, I hope you find value from our discussion. In the next episode, Rob and I will be discussing how digital transformation can add value to a business. So stay tuned for that one. Rob, thank you again for giving up your time to share your perspectives today. I've really enjoyed the show and I look forward to the next episode.

Rob Nicholls (40:11.313)

See you, Paul.