Measurement of Profit Losses from Brand Damage: The Case of an Unlisted Company

This paper deals with the measurement of profit loss stemming from the unfair competition and its negative impact on the brand value of the company ABC Holding in the Czech Republic. Profit loss is the difference of wealth between the state, what the party suffering the damage (unfair competition) achieved, and what it would achieve if the damage did not occur. It is therefore a foregone gain of property which was prevented by the harmful event. Assets (wealth) of the owner of ABC Holding suffering the damage represent the value of its 100% stake in the company, which includes the value of the brand ABC. Therefore, for the purposes of quantifying lost profits in this paper, we first need to quantify the value of the brand ABC affected by the consequences of a damage event and the hypothetical value of the brand ABC under the ordinary course of things. For appraising the fair value of a brand of an unlisted (private) company in this paper, we apply the Verifiable Interdependent Model (VIM), which has been designed specifically for the conditions of the business environment with the lack of empirical data for intangible assets appraisal or their low quality.