Valuation Handbook
The practical guide for owners and advisers — substantive, clear, ready to apply. Drawn from the day-to-day transaction work at IGCP Capital Partners GmbH.
Valuation Handbook
A practical guide for owners and advisers — substantive, clear and ready to use straight away.
- Around 80 pages of focused expertise
- Five valuation methods explained step by step
- Worksheets to fill in
- Test questions with solutions
Who the handbook is for.
The handbook is written for owners of small and mid-sized companies who want a sound understanding of what their business is worth — whether in preparation for a succession, a financing, a change among shareholders, or simply to take stock. It is equally suited to tax advisers, lawyers and management consultants who support clients on valuation questions and need a concise methodological overview.
No prior knowledge of valuation is required. The material is structured so that you can follow each method step by step, apply your own figures and assess the result in a measured way.
What you will learn.
At the centre stand the five valuation methods most relevant in practice — from the multiples approach through discounted cash flow to the net asset value and capitalised earnings methods. You will understand when each method is appropriate, which data it requires, and how to avoid the typical pitfalls.
The handbook also addresses the qualitative value drivers — customer structure, owner dependency, scalability, competitive position — and works through a fully calculated case study showing how EBITDA, multiple and net debt yield a transparent equity value. Worksheets and test questions with solutions make the material directly applicable.
How a company value actually comes about
There is no single company value. There is a range which, depending on method, buyer type and negotiating situation, can differ by a factor of two. Anyone who understands the mechanics behind it negotiates differently — and recognises which figure is robust and which is merely asserted.
The adjusted EBITDA is the real calculation base
No buyer values the profit shown in your annual accounts. What is valued is the normalised result: one-off effects are stripped out, a market-standard managing-director salary is applied, private cost components are adjusted, non-operating assets are separated, deferred investments are caught up. This adjustment decides more value than any discussion about the multiple — because it works multiplicatively. Anyone who can properly evidence an EBITDA 200,000 euros higher gains a good million in purchase price at a factor of six. Evidence means: verifiably documented, not asserted.
The multiples approach — the market standard
In practice the large majority of mid-market transactions are settled via multiples: adjusted EBITDA times a factor. The factors derive from comparable transactions and vary strongly by sector, size and quality of the business model. Recurring revenue, low customer concentration, a functioning second management layer and documented processes raise the factor. Owner dependency, a single major customer, outdated technology or missing figures lower it. Important: publicly quoted multiples mostly refer to considerably larger companies. For smaller businesses a noticeable size discount applies.
Capitalised earnings value and Discounted Cash Flow
Both methods discount future surpluses back to today’s value. The capitalised earnings method is the methodologically recognised approach in the German-speaking region and is mandatory on certain occasions — division of an estate, settlement payments, tax valuation. Discounted Cash Flow is used internationally and works with free cash flows and a weighted cost of capital. The weak point of both methods is the same: they are extremely sensitive to the assumptions. A growth rate in the terminal value changed by one percentage point can shift the result by twenty per cent. Every serious valuation therefore includes a sensitivity calculation — not a single figure.
Net asset value and liquidation value as the floor
The net asset value adds up the replacement values of the assets less liabilities. For companies with strong earnings it is economically irrelevant, but it forms the floor: no rational seller accepts less than what a break-up would yield. It becomes relevant for asset-intensive businesses, for property ownership and where earnings are permanently weak. The liquidation value assumes a break-up and lies below it, because realisation discounts, a social plan and wind-up costs are deducted.
Why purchase price and company value are two different figures
The value determined is an enterprise value — the value of the operating business, calculated free of debt and cash. What reaches you is the equity value: enterprise value minus financial liabilities plus surplus cash, adjusted for a working capital normalisation. Precisely in this bridge the toughest negotiations arise. What counts as a financial liability? Do pension provisions and lease obligations belong there? What is the normal working capital? Every one of these definitions is money — often more than a decimal place on the multiple.
What the value does not capture: the structure of the deal
A purchase price of five million paid in full at closing is worth more than seven million with three million as an earn-out over four years. Earn-outs regularly fail because the buyer changes the cost structure after takeover and the measurement base is no longer the one that was agreed. Equally important is the question of share deal or asset deal: it decides the transfer of liabilities and the tax burden and can significantly change the net proceeds. Never negotiate about the price alone, therefore, but always about price, payment timing, securities, the warranty catalogue and the structure together.
If you need a robust valuation for a specific occasion: Company valuation · Company value calculator · Selling a GmbH
Frequently asked questions.
In what format do I receive the handbook?
You receive the handbook as a PDF of around 80 pages. The download begins immediately after payment; we also send the PDF and the invoice by email.
For which companies is the handbook suitable?
The focus is on small and mid-sized companies in the DACH region — typically GmbHs, owner-led businesses and family companies. The methods presented apply across industries.
Does the handbook replace a professional valuation?
No. The handbook gives you a solid grasp of the standard valuation methods and helps you take stock yourself. A recognised valuation in the context of a sale, succession or financing is something we are happy to prepare under mandate.
Will I receive an invoice?
Yes. After purchase you automatically receive a proper invoice from IGCP Capital Partners GmbH by email.
Looking for a concrete, individual assessment? An overview of the methods we apply can be found under Business valuation. For an initial orientation our business value calculator is available free of charge.