A multinational group operating in the fashion industry required VVA Expert Opinion to appraise the arm’s length value of a defensive asset (dormant brand) in view of an advanced pricing agreement with tax authorities.
Upon completion of the analysis, the inactive state of the dormant brand has turned out to be reversible. This implies that the defensive asset equates a strategic option whose value should be determined through an option-based method. Nevertheless, due to the limited information base and the consequent inapplicability of both the selected method and an alternative method based on comparable transactions, the valuation has been based on replacement cost approach.
The final values represented a reference point for the advance pricing agreement signed with tax authorities.