Essay
Rethinking Brand Equity in Private Equity
Private equity is very good at measuring what it can see. EBITDA multiples, discounted cash flow, comparable transactions. These models are precise, defensible, and shared by everyone in the room. They are also quiet about the thing that often decides whether a consumer business still works in year five, whether people still want it.
My thesis looked at this gap through interviews with investors and operators across Nordic funds including Altor, Axcel, eEquity, EQT, and Verdane. A pattern showed up again and again. Everyone agreed brand mattered. Almost nobody had a way to govern it. So brand became a story told in investment committees and a line item cut when the quarter got tight.
The consequence is subtle. Under pressure to show margin, a fund can strip cost from the exact activities that built consumer preference, then report a stronger business on paper while the brand quietly gets weaker. Value has not been created. It has been moved forward in time, from the next owner to this one.
I think the fix is a change in category rather than a change in metric. Brand equity should be treated as a strategic asset with an owner, a thesis and a handful of indicators reviewed as seriously as working capital. Whether you can hold your price, whether people come back without being paid to, what it costs to win the next customer, and whether someone still chooses you when a cheaper option is sitting right next to it. None of those measures is perfect on its own, but together they tell you far more than the silence most funds settle for.
That also changes the operating conversation. Instead of asking what marketing costs, a board can ask what the brand is compounding, and whether the last twelve months made the next owner's job easier or harder.
The firms that learn to govern brand equity, not just admire it, will hold better assets and sell better stories that happen to be true.
The thesis is finished, but the question is not, and the people who do this for a living will always know things a study cannot capture. If you have a view on how brand should be governed inside a holding period, I would love to hear it at agrima2503@gmail.com.