Earlier this year, when Microsoft offered to buy Yahoo! for $47.5 billion, it wasn’t because the Internet giant had a fleet of aircraft or thousands of acres of real estate filled with warehouses or blocks of Manhattan skyscrapers. Those are physical assets, and Yahoo! doesn’t have 47.5 billion of them.
It was in large part because of the Yahoo! name – its brand identity. “The world’s most visited home page” has global drawing power and the potential, through name and brand recognition, to continue to grow in value.
Though few companies reach the same stature of Yahoo!, the case illustrates how your brand, your identity, can be worth far more than product inventory or the price of your services. It is also the one thing of worth no one else can take from you. They can take your ideas, copy your styles, even sweep up your patents when they expire. But they can’t take your brand. It has a lasting value – brand equity – that can often outweigh physical assets.
Yahoo! turned down the offer. The company said it was worth more in the range of $53 billion. It told shareholders, “Yahoo! is profitable, growing, and executing well on its strategic plan.”
In July, the two companies instead settled on “a 10-year search partnership” – a deal expected to benefit both in their effort to rival search engine behemoth Google. Right or wrong, only time will tell. But Yahoo!’s strategy proves that the return on investment in a brand identity can multiply the value of a company many times over.
Keep that in mind the next time you have an opportunity to build brand equity. Invest wisely and, when a buyer or an investor comes knocking at your door, you’ll be the one shouting, “Yahoo!”
