Companies aren't allowed to put a value on their brands. Why not?

And, as a recent article in The Economist points out, the values of brands also come blinking into the light when companies buy each other. The premium that an acquirer pays (the difference between the purchase price and the value of the target company’s share price before the deal is announced) often includes the value of the brand.

Equally absurdly, that deal valuation gets locked in forever: a company must reveal when it thinks the value of a brand has fallen but can never increase it, even if external agencies and common sense suggest that's what has happened.

Given how important brands are becoming to companies, it would surely be better if companies were able to provide investors with a clearer indication of their worth. Those who set accountancy standards worry that it’s too difficult to value brands and, because they are unique, might potentially be open to manipulation.

But our analysis shows a high level of agreement among three large consultancies – Interbrand, BrandFinance and Millward Brown – who value international brands. For example, all of them place Apple, Google and Microsoft among the top five most valuable brands in the world.

True, the monetary value ascribed to those brands does vary but taking an average would at least provide a check on a company’s own accounting and give investors a much clearer picture than they currently have.

ben.wright@telegraph.co.uk

more