SME Valuation

SME valuation is the process by which a financial expert determines the economic value of a non-listed company, for the purposes of a sale, an acquisition, a family transfer, a fundraising round or a shareholder dispute. It mobilises several complementary methodologies whose relevance varies according to the company's size, sector and stage of development.

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The three main approaches are: the income approach (DCF method), which discounts future cash flows at the WACC; the market approach (listed company multiples and transaction multiples), which benchmarks the SME against similar companies; and the asset approach (revalued net assets), which values the net assets at market prices.

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For Franco-Swiss SMEs, the practitioners' method is frequently used in Switzerland: it weights the earnings value (2/3) and the substantive value (1/3), offering a robust result for established SMEs with stable profitability. In France, the DCF method dominates with systematic use of EBITDA multiples as cross-check.

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EBITDA normalisation is the indispensable prior step to any valuation: it adjusts non-recurring charges and income, non-market management remuneration and exceptional items to obtain an EBITDA reflecting the structural performance of the business.

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Example: a Swiss services SME (CHF 5.0 million turnover, CHF 800,000 normalised EBITDA) is valued using three methods: DCF at CHF 4.2 million, sector multiples (5.5x EBITDA) at CHF 4.4 million, practitioners' method at CHF 3.9 million. The valuation range retained is CHF 4.0 to 4.4 million — confirming a central value of CHF 4.2 million.

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At Hectelion, we conduct SME valuations using the most rigorous standards, with a multi-method, documented and defensible approach for all stakeholders.