Brand Valuation in Private Equity: Beyond EBITDA and the New Drivers of Investor Returns
- Laura Derbyshire
- 4 days ago
- 6 min read
OSER Perspective | Investor Strategy
Most investors meticulously model operational upside, yet often overlook one of the few levers capable of materially shifting valuation. Brand.
I am not talking about the logo or the visual identity refresh six months before exit, or even a marketing exercise delegated three layers down. I am talking about brand as infrastructure.
Brand as infrastructure.
While EBITDA shows how a business performs today, the brand significantly influences how valuable that performance becomes tomorrow. And in increasingly crowded, AI-accelerated markets, that gap is widening.
The Blind Spot Sitting Inside Otherwise Sophisticated Investment Strategies
Private equity firms and growth investors are exceptional at identifying operational inefficiencies. They know how to unlock value through pricing strategy, cost discipline, leadership upgrades, and commercial acceleration. But in my experience and in conversations with these highly capable people, many still underestimate the multiplier effect of strategic clarity.
Not because the brand lacks impact, but because it rarely appears neatly inside a model - you won’t find it conveniently sitting in column G of the investment pack.
Yet it shapes nearly every metric that ultimately drives enterprise value:
Purchase confidence
Sales velocity
Pricing power
Customer retention
Talent attraction
Strategic optionality
Buyer competitiveness at exit
Ignore brand, and friction shows up everywhere. Strengthen it, and performance improves without proportionally increasing spend.
The market understands you faster.
And speed, in growth businesses, is value.
Brand Valuation in Private Equity: A Compounding Asset.
The highest-performing investor-backed companies tend to share one characteristic: they are strategically understandable.
Customers “get it.” Employees rally behind it, and future buyers recognise it instantly. That level of clarity creates a compounding effect.
Once in motion, this cycle reduces reliance on brute-force growth tactics:
less discounting, lower acquisition pressure, and more predictable revenue.
Investors don’t just buy growth - they buy confidence in future growth.
The Three Brand Traits That Consistently Strengthen Valuation
1 > Radical Clarity
Ask five executives what makes the company different. If you hear five versions, you don’t have positioning; you have risk. Clarity sharpens decision-making at every level, it tells you:
Where to compete
Which customers to prioritise
How to price
What not to build
Without it, leadership teams drift into reactive growth, which is expensive.
2 > Distinctiveness
Functional advantage is increasingly short-lived. AI is compressing product defensibility, capital is accelerating the emergence of competitors, and switching costs are falling.
Which means perception is moving upstream as the deciding factor.
Distinctive brands reduce cognitive load for buyers. They signal confidence. They feel safer to choose.
For investors, this is good news because it means sales cycles shorten, pricing conversations soften, and demand becomes less fragile.
3 > Internal alignment (the underestimated multiple driver)
Here is the part rarely discussed in investment committees: A clear brand aligns an organisation faster than almost anything else.
It has been researched and proven time and time again that when teams understand the brand narrative:
Product roadmaps tighten
Marketing becomes directional
Sales stories land harder
Hiring improves
Execution speeds up
And as we all know, speed is not just an operational advantage: it is a valuation story.
Where Brand Quietly Improves the Metrics Investors Care About Most
Brand’s influence and valuation potential become clearest when mapped against the numbers private equity and investors watch most closely.
Strong brands typically experience:
Lower customer acquisition costs
Higher lifetime value
Greater pricing resilience
Reduced churn
Faster purchase decisions
Individually, these improvements look operational. Collectively, they move multiples.
The Due Diligence Question Investors Should Be Asking
During diligence, firms rigorously interrogate financial durability, legal exposure, and operational maturity and some also ask
“Is this business strategically understandable to the market?”
Yet brand incoherence is frequently the hidden reason companies plateau post-investment.
Early warning signs tend to look harmless:
Strong product, weak story
Performance marketing carrying the growth burden
Inconsistent positioning across regions
Leadership misalignment
Customer confusion about why the company matters
None feels catastrophic. Until growth slows.
Then the scramble begins to find a new agency, a new CMO and more spend - when the underlying issue is likely to be strategic clarity.
Treat Brand Like an Operating Lever, Rather Than a Pre-Exit Polish
The most sophisticated investors no longer treat brand as a cosmetic enhancement ahead of sale; they embed it inside the value creation plan, evaluated at three moments:
Pre-acquisition
Is there a defensible market position, or simply a capable product?
Early hold period
Does the leadership narrative support accelerated growth?
Pre-exit
Does the market recognise the value you’ve built quickly enough to create competitive tension?
Because recognition drives buyer competition, competition drives multiples, and multiples drive returns.
In AI-Accelerated Markets, Brand Is Moving From Advantage to Necessity
We are entering a cycle where:
Products are easier to replicate
Content is infinitely producible
Performance channels are noisier
Attention is fragmented
Differentiation is migrating upstream and into perception and the companies that outperform will not merely be better, they will be clearer, more memorable and they will be faster to trust.
Brand is becoming the shortcut to decision-making in a world powered by AI, and forward-looking investors are already adjusting to this reality.
The Cost of Waiting
Many firms delay brand investment until something breaks: CAC rise, growth soften and competitors feel louder. But rebuilding narrative mid-flight is far harder than designing it early.
The stronger move is to be proactive - to build the strategic story while momentum is on your side and then let brand compound alongside revenue.
The OSER Perspective
Brand remains one of the most underutilised growth levers inside investor-backed businesses - largely because it has historically been explained in the language of marketing rather than enterprise performance.
So the framing needs to change.
Brand is not about looking bigger - it is about becoming easier to believe in.
Belief reduces friction, and friction suppresses growth. If you remove it, the value expands.
When reviewing your next investment, ask:
Can leadership clearly articulate why this company wins?
Does the market understand it just as quickly?
Would a future buyer immediately “get it”?
If the answer is no, you have not just identified a branding gap, you have identified a value creation opportunity.
The investors pulling ahead over the next decade will not be those who treat brand as decoration. They will be the ones who recognise it as infrastructure.
Want sharper growth thinking for investor-backed businesses? Join the OSER Circle: a private read for founders, CEOs, and investors who value perspective over noise. Strategic thinking, market signals, and the questions shaping tomorrow’s growth.
Frequently Asked Questions
Why should investors care about brand when financial performance is strong
Because financial performance explains where a business is today, whereas brand heavily influences how valuable that performance becomes tomorrow.
A strategically clear brand improves pricing power, accelerates sales cycles, strengthens retention, and increases buyer confidence at exit. Collectively, these factors can materially impact valuation multiples.
Investors who treat brand as infrastructure (rather than cosmetic) typically create more resilient growth stories.
Does brand really influence valuation?
Indirectly, yes, but often significantly.
Strong brands tend to generate more predictable revenue, lower customer acquisition costs, and greater competitive differentiation. These characteristics reduce perceived risk for future buyers, which can increase purchase appetite and support stronger exit conditions. Quite simply, buyers pay more for businesses they quickly understand and trust.
When should investors evaluate a brand - before or after acquisition?
Both, but ideally before.
Pre-acquisition brand assessment can reveal hidden risks:
Unclear positioning
Weak differentiation
Customer confusion
Overreliance on paid acquisition
Post-acquisition, strengthening the brand becomes a growth lever - aligning leadership, sharpening the market narrative, and accelerating commercial execution. The earlier the brand is addressed, the more it compounds alongside enterprise value.
Is brand more important in B2B or B2C investments?
Increasingly, both. In B2C, brand drives recognition and emotional preference. In B2B, where purchase decisions carry a higher risk, brand signals credibility, stability, and confidence. It reduces perceived buyer risk and often shortens complex sales cycles.
As markets become more crowded and products are easier to replicate, brand is shifting from an advantage to a necessity across sectors.
What are the warning signs that a portfolio company has a brand problem?
Common indicators include:
Rising CAC without a clear explanation
Inconsistent messaging across regions or teams
Heavy reliance on discounting
Elongated sales cycles
Difficulty articulating differentiation
Leadership misalignment on strategy
Individually, these may appear operational, but together they usually indicate a clarity issue.
Should the brand be part of the value creation plan?
For sophisticated investors, it already is. Brand should sit alongside operational improvement, pricing strategy, and leadership optimisation as a core value lever.
When embedded early, brand strengthens the investment narrative, accelerates growth, and creates competitive tension at exit - one of the most reliable drivers of multiple expansion.
