Sonic Brand as an Intangible Asset: What Your Diligence Checklist Was Never Built to Find
- ErikWalterThompson
- 4 days ago
- 8 min read
By Erik Walter Thompson, Founder, Walter Audio
A private equity due diligence checklist will name every category of intellectual property worth owning. Patents. Copyrights. Trademarks. Brand. As of 2026, the categories are exhaustive, cross-referenced, and battle-tested across thousands of deals.
Open any one of them and look for the line item that asks how the brand sounds.
It isn't there. Not because a deal team forgot to add it. Because the categories themselves were codified when visual identity was the only brand asset anyone was rigorously tracking, and nobody was yet treating sonic identity as essential enough to warrant the same scrutiny. Trademark covers the name and the logo. Copyright covers the music, but only as a licensing question: who holds the rights, who gets paid, who's exposed if a track is used without clearance. Neither category was ever built to ask whether a brand's sound is a strategic asset in its own right, the way the logo is.
This is the Audio Identity Gap, applied to the deal table instead of the campaign brief. We covered the consumer-memory side of this gap in the first piece in this series. This one is about what happens when that same gap shows up in a purchase price allocation, a 100-day plan, and a hold-period value creation playbook, three places where the omission has a number attached to it.
By the end of 2025, intangible assets made up approximately 92% of S&P 500 market capitalization, up from 17% in 1975 (Ocean Tomo, 2025 Intangible Asset Market Value Study). The vast majority of what a company is worth no longer lives in plant, equipment, or inventory. It lives in things you can't touch. Sound qualifies. Most diligence checklists don't yet know it does.
Sonic brand is an intangible asset whenever a company has built owned, distinctive audio that drives recognition and recall, in exactly the same way a trademark or a registered design does. The difference is that nobody's checklist has a slot for it yet.
Sonic brand intangible asset, defined: A sonic brand intangible asset is owned, distinctive audio, a sonic logo, brand anthem, jingle, consistent music identity, UI/UX sound for digital products, or ownable feedback sound for hardware (the beep on a medical device, the chime on an appliance), that a company controls and can separately identify on its balance sheet, distinct from licensed or unowned audio whose value cannot survive a change of ownership.
The Checklist Was Built Before Sonic Identity Became Essential
Sound has been ownable for decades. Copyright has covered sound recordings since long before any of this mattered to a deal team. The gap isn't legal. It's attention. Look at how the discipline defines its own scope. PitchBook's due diligence checklist for VC, PE, and M&A investors scopes intellectual property due diligence as patents, copyrights, trademarks, and brand. Diligent's M&A due diligence guide asks whether a company's brands and creative works are adequately protected, and lists music as a copyright category, alongside software and literature, never as a brand identity question. Darien Group, which runs brand audits specifically for private equity firms, defines the brand audit as a review of identity, messaging, and materials against strategy and market positioning. The Lane Agency's brand audit framework scopes brand identity as logo, typography, colour palette, and visual language. Brand24's audit guide examines internal branding, customer experience, and external presentation, with external branding defined as the visible customer-facing elements from logo to ad creative.
Five different frameworks, five different firms, written across legal due diligence, M&A guidance, and PE-specific brand strategy. Not one names sound as a category. Music shows up exactly once, inside copyright, as a licensing question. It never shows up inside brand, as an identity question.
That's not an oversight. It's a vocabulary problem. Trademark protects a name. Copyright protects a recording. Neither was designed to ask whether a brand's sound is doing the same recognition work as its logo, because nobody was asking that question when those categories were codified.
First Lane's 100-day plan framework for PE-backed marketing lists a brand and content audit as one of five explicit post-close workstreams, alongside strategy, funnel, team, and tech stack. Its own stated question: does the story match the company you actually are post-deal. That's a real, structured audit category, doing real work, asking a real question. It still has no room for sound, because the question it asks is about narrative, not about what the company sounds like when the story is being told.
I won't call this negligence. Trademark and copyright vocabulary were codified when visual identity was the only brand asset anyone was rigorously protecting and tracking. Sonic identity could have been owned the entire time. Nobody was treating it as essential enough to build a category around. PE isn't ignoring audio. The discipline hasn't caught up to how essential it's becoming yet.
What This Costs at the Deal Table
The gap stops being academic the moment a brand changes hands. Purchase price allocation splits the purchase price into two buckets. Separately identifiable intangible assets, the things a buyer can isolate, name, and carry on the balance sheet as their own line item. And goodwill, the residual premium left over once everything ownable has been counted.
A registered trademark sits cleanly in the first bucket. When Diamond Foods acquired Kettle Foods in 2010, roughly 40% of the purchase price, about $235 million, was allocated to brand intangibles as a distinct, recognized asset, not folded into goodwill as an unexplained premium. That's a real number from a real SEC filing, attached to a real visual brand.
Now run the same exercise on a brand's sound. If the audio was licensed library music chosen by whichever production company had the account that quarter, there is nothing to separately identify. No owned asset exists to put a number next to.
Whatever recognition that audio built belonged to the track, not the brand, and it walks out the door with the publisher who holds the rights. At best, it disappears into goodwill as an unexplained part of the premium. At worst, nobody ever finds out, because nobody was looking. In a sonic diligence review Walter Audio ran on a portfolio-stage CPG brand, a 150-post sample of Instagram content turned up 16 different credited tracks spanning seven genres, with none repeating more than twice and zero owned by the brand, against a broader 350-post sample across organic and paid social where nothing recurred and nothing was owned. Every one of those impressions built recognition for a song. None of it built recognition for the brand. That brand's diligence file, if anyone pulled it today, would show nothing where the sonic asset should be.
No acquisition has publicly reported breaking out sonic IP as its own line item the way trademark routinely is. That's not evidence the asset class doesn't qualify. It's evidence that nobody has been keeping the asset in a form a deal team could find. Trademark earns separate treatment because brands register it, document it, and maintain it in a form that survives a change of ownership. Sonic identity, in almost every brand that has one, lives nowhere but a production company's archive and whatever the social team happened to post last quarter. The mechanics that govern trademark treatment under purchase price allocation don't care whether the underlying signal is visual or sonic. They care whether it's owned, distinctive, and separable. The day a brand shows up to a deal with sonic IP that meets that bar, it gets treated like any other intangible. Until then, the value is real and the paper trail is empty.
Why the Gap Compounds Across the Hold Period
A static gap would be a rounding error. This one isn't static.
Consistency is what makes a distinctive asset appreciate instead of depreciate. Across 139 US and UK brands tracked over five years, the most consistent quartile posted a 2.9x profit multiplier over the least consistent, an average ROI of $8.8 versus $2.1 per dollar of spend. Every consistent exposure deposits into the same memory structure. Every inconsistent one starts a new account that never accumulates anything.
That's the mechanism a 100-day plan misses when its brand and content audit asks about narrative alignment and stops there. The portfolio brand's visual identity gets locked down on Day 1, brand guidelines, color systems, logo usage, all enforced. Its audio doesn't. The same diligence review referenced above found a brand's creator and influencer network, more than two dozen handles producing content weekly, drawing from personal music choices with zero brand-exclusive tracks among them. No governance. No consistency. No one tracking whether this quarter's sound has anything to do with last quarter's.
The operating partner who locked down the logo and left the soundtrack to chance built half a value creation plan.
The Question the Checklist Should Be Asking
The brand and content audit already exists. The trademark and copyright categories already exist. None of them need to be invented. They need one new question added to a category that's already there: does this brand own its sound, the same way it owns its name.
That question doesn't require a new diligence workstream. It requires the existing one to stop stopping at the logo.
I believe sonic IP will eventually be a named line item in brand acquisitions the way trademark portfolios are today. No deal has published that figure yet. The firms that start asking the question before that happens won't be early. They'll be the ones who noticed the checklist was incomplete before everyone else updated theirs.
Frequently Asked Questions
Is sonic brand actually an intangible asset under accounting standards like ASC 805?
The same separability test applies regardless of whether the asset is visual or sonic. Purchase price allocation under ASC 805 asks whether an asset can be separately identified, owned, and valued apart from goodwill. A registered trademark passes that test routinely, evidenced by deals like Diamond Foods' acquisition of Kettle Foods, where roughly 40% of the purchase price was allocated to brand intangibles. No deal has yet broken out sonic IP as its own line item the way trademark is broken out, but that reflects how rarely brands hold sonic IP in an ownable, documented form, not a limitation in the accounting standard itself.
Why don't standard PE due diligence checklists include sonic branding?
Because the categories were built around the asset types that existed when the discipline was codified. Intellectual property due diligence is typically scoped as patents, copyrights, trademarks, and brand. Music appears inside copyright, as a licensing question about who holds the rights, never inside brand, as a question about whether the audio itself builds recognition. The vocabulary has no slot for sonic identity as a distinct, brand-defining asset, so the checklist walks past it without anyone deciding to exclude it.
What happens to a portfolio brand's sonic identity if it was never owned?
It behaves exactly like any unowned creative asset at exit. If the brand's audio was licensed library music chosen ad hoc, there is no separately identifiable asset to carry to a sale. Whatever recognition that audio built accrued to the track and its publisher, not to the brand. The value, if any existed, either disappears into goodwill as an unexplained part of the purchase premium, or it never makes it into the deal at all because nobody was tracking it as an asset in the first place.
How common is it for a portfolio brand to have zero owned sonic assets?
In a Walter Audio sonic diligence review of one portfolio-stage CPG brand, a 150-post Instagram sample used 16 different credited tracks across seven genres, with no track repeating more than twice and none owned by the brand, a pattern that held across a broader 350-post sample spanning organic and paid social. That pattern, high sound-on volume paired with zero owned audio, is the default state for a brand that has never run a sonic diligence audit, not an outlier.
Walter Audio is a sonic branding firm that builds owned, distinctive audio assets for CPG brands and the firms that invest in them. We close the Audio Identity Gap.
