Accounting Firm Trade Names

What is the value of the Schneider Downs trade name? The number is too large to fit on this page! I am joking, but in all seriousness, a company’s trade name might have considerable value, and it is often necessary to determine the value of a professional service firm’s trade name (this article focuses on accounting firms in particular) for financial reporting purposes.

When an acquirer purchases a company, any intangible assets owned by the target company (including its valuable trade name, if any) must be recorded on the acquirer’s balance sheet.

The trade name is often not as important as some of the other intangible assets commonly owned by accounting firms; namely customer relationships. Since much of an accounting firm’s work is recurring, which is common with audit and tax services, the value of the firm’s ongoing customer relationships (often enriched through numerous years of repeat service) are typically more valuable than the firm’s trade name.

The low value placed on accounting firm trade names is also evident when looking at post-acquisition branding strategies within the public accounting industry. Typically, the target accounting firm’s name is dropped and replaced with the name of the acquiring firm, or the two firms’ names will be combined into a new name. For example, in the 1989 merger of Deloitte Haskins & Sells with Touche Ross, Deloitte & Touche was the emerging firm name at the time.

In contrast, an important brand name is normally left unchanged when the owner of the name is acquired. This is common with brands representing products (as opposed to services) such as food, drink and car brands. For example, the Jeep brand has exchanged hands many times since the company began in 1941, but the Jeep name remains unchanged. The fact that accounting firm names are often replaced or modified post-acquisition supports the conclusion that the trade name is not a significant value driver in the transaction.

Schneider Downs has significant experience in determining the value of trade names and other intellectual property for clients to use in transfer pricing and financial reporting applications.  Please contact Stephen D. Thimons (412-697-5281; [email protected]) or Joel M. Rosenthal (412-697-5387; [email protected]) of our office if you need assistance determining the value of your firm’s intellectual property.