Business valuation mandate for a Swiss high-technology engineering group
Valuation of a Swiss engineering group
Project description: valuation of a Swiss high-technology engineering group
The engagement covered the estimation of economic value of a Swiss high-technology engineering group, active in the design, numerical analysis and production of complex equipment for the space, aeronautics and naval sectors. The business valuation was intended to inform a discussion on the valuation of the group and of its different activities.
The company has a strong intellectual and technical value base: its main asset is the know-how of its engineers, far more than its industrial base. This characteristic shaped the entire methodology.
Key issues: an asset-light company, know-how that is difficult to value
- restate the accounts to show the real profitability, neutralising exceptional items and above-market executive compensation;
- value an intangible asset (know-how, team expertise, developments in progress) that the accounts only partly reflect;
- structure the product business plans (financial plan, break-even point, return on investment) so that they can be used in the valuation;
- avoid over-weighting key-person dependency, while still taking it into account.
Approach and results: a valuation based on normalised EBIT
As the group has few heavy fixed assets, its depreciation is low and homogeneous. In this case, normalised EBIT gives a more complete reading of profitability than EBITDA, without introducing a comparability bias. The valuation is therefore based on normalised EBIT, cross-checked against the other approaches:
- restatement of normalised EBIT and EBITDA, the common basis of all methods;
- discounted cash flow (DCF) method, built from the product business plans and discounted at the weighted average cost of capital;
- transaction multiples method, applied to a sample of high-technology engineering comparables.
To put the multiples approach in context, published benchmarks for listed companies give the following reference points (Damodaran, NYU Stern, January 2026, US universe, companies with positive EBITDA):
- Aerospace and defence: EV/EBITDA of around 22x, EV/EBIT of around 35x.
- Engineering and construction: EV/EBITDA of around 17x, EV/EBIT of around 25x.
These multiples relate to large listed companies: an unlisted company of modest size must be assessed after a size and illiquidity discount.
The comparative reading of the two multiples follows the logic of our publication on EV/EBIT and EV/EBITDA: EBIT is retained as the main multiple only when the company is lightly capitalised and its depreciation is homogeneous.
The conclusions established a defensible value range, used as the basis for discussion in the group's shareholder reflection.
Methodology: why EBIT, reconciliation with the DCF and discounts
For a company with very low asset intensity, normalised EBIT is retained as the main aggregate rather than EBITDA. Depreciation is low and homogeneous, so EBIT creates no comparability bias between peers, and it reflects real profitability better than EBITDA. This logic is detailed in our publication on EV/EBIT and EV/EBITDA.
The panel of comparables is built to follow the same logic: companies comparable in terms of activity, size and asset profile. A sensitivity analysis is run on the key assumptions, to measure the robustness of the range rather than retaining a single point.
The DCF method is reconciled with the multiples-based approaches. A gap between the two results is never resolved by a simple average: it leads to a review of the business plan assumptions, the normalisation of EBIT and the relevance of the sample, as explained in our publication on business valuation approaches and methods.
The weighted average cost of capital takes into account the technical and industrial maturity of the company. Hectelion has factored in the manufacturing readiness level (MRL) with regard to the company's technical and industrial aspects, following the approach described in our publication on technological maturity in the WACC. This point is treated qualitatively in the report: it is a risk to be assessed, not a mechanical premium.
Finally, the values obtained from the multiples are adjusted, where the context justifies it, for size, illiquidity and control, based on documented criteria. The principles of these adjustments are set out in our publication on premiums and discounts.
A team and know-how at the heart of the value
Throughout the engagement, Hectelion particularly appreciated the quality of the team, whether engineers or management: technical depth, rigour in project documentation and the ability to explain development assumptions. This quality of the team is a value driver in itself, and it was taken into account in the analysis of the sustainability of revenues.
Comparable transactions were identified from transaction databases, notably Mergermarket, and from information published by listed companies, notably the documents filed with the SEC. Each transaction retained was checked for size, sector and structure.
Summary: valuation based on normalised EBIT, know-how valued, defensible value range
Business valuation engagement for a Swiss high-technology engineering group with low capital intensity. Valuation based on normalised EBIT, cross-checked with a DCF and transaction multiples, with particular attention paid to the value of the know-how and the team. Deliverable: an independent valuation report and a defensible economic value range.
FAQ: the essential questions on valuing an asset-light engineering group
Introduction: what to remember before the questions
The following questions cover the most frequent concerns of business leaders when having a know-how-based company valued, from the method used to the negotiation.
Q1: Why EBIT rather than EBITDA for this company?
Because its depreciation is low and homogeneous: EBIT then creates no comparability bias between peers, and it gives a more complete reading of profitability. For a more capital-intensive company, EBITDA would remain the reference.
Q2: My company is lightly capitalised: why not simply value it on EBITDA like everyone else?
For a company that invests little, EBIT is almost identical to EBITDA and reflects real profitability better, without creating a comparison bias. EBITDA remains the reference for more capital-intensive companies, where depreciation varies widely from one peer to another.
Q3: How is know-how that does not appear on the balance sheet valued?
It is reflected in the gap between economic value and the value of identifiable assets, that is, technological goodwill, provided it is supported by the business plans and the sustainability of the team.
Q4: Does dependence on key engineers reduce the value?
Yes, it is taken into account. A strong, documented team reduces this risk, while dependence on an irreplaceable person increases it. The valuation takes this explicitly into account in the reference scenario.
Q5: How long does a valuation of this kind take?
Usually 6 to 10 weeks, depending on the availability of analytical data and of the product business plans.
Q6: Can this valuation serve as a basis for a later transaction?
Yes: it is a first step towards a fundraising, a partial sale or the entry of an investor.
Q7: What is the difference between economic value and a sale price?
Economic value is the result of a methodological analysis. The sale price is the result of a negotiation, which takes into account the context, the possible acquirers and the terms of the transaction. The valuation informs the negotiation; it does not replace it.
Q8: Should a discount be applied because my company is not listed?
Often yes, since a stake in an unlisted company is less liquid and sometimes without control. These discounts must be justified by the circumstances of the company and of the market, as set out in our publication on premiums and discounts.
Q9: The DCF and the multiples give different results: which one should I trust?
Neither on its own. A gap is a signal that requires a review of the business plan assumptions, the normalisation of results and the relevance of the comparables. The two results are not simply averaged.
Q10: Is technology risk taken into account in the discount rate?
Yes, through the technical and industrial maturity of the company, treated qualitatively in the analysis of the weighted average cost of capital. It is not a premium applied mechanically.
Q11: Why restate the accounts before a valuation?
Published accounts contain exceptional items, hidden reserves and sometimes executive compensation above market levels. Restatement shows the truly recurring profitability, the basis of any valuation.
Q12: How do investors look at intellectual property and patents?
They want to know whether the technology is protected, whether it actually belongs to the company, and whether it can be exploited without depending on a person or a third party. These points determine how much value is attributed to the know-how.
Q13: Does a growing market guarantee a high valuation?
No. A growing market can inflate market multiples, and a valuation that ignores the real quality of profitability and of the business plans is fragile. This is why the valuation cross-checks several methods.
Similar engagements: business valuations in industry and high technology
The transactions shown include those completed by, or with the involvement of, Hectelion team members in current or previous professional roles. They are presented for illustrative purposes only and do not imply exclusive responsibility by Hectelion.
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The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.