Equity (or shareholders' equity) represents the residual interest in the assets of a company after deducting all liabilities — the net worth belonging to shareholders. It comprises paid-in share capital, share premium, legal and voluntary reserves, retained earnings and other comprehensive income items. In business valuation, the equity value (valeur des capitaux propres) is the amount attributable to shareholders, derived from enterprise value by deducting net financial debt. In due diligence, equity quality — composition, distributable portion and hidden reserves — is analysed to assess the company's true financial strength.

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Example: a Swiss company presents statutory equity of CHF 8.5 million. Restated to economic values (real estate +CHF 2.2 million, equipment write-down -CHF 400,000), economic equity amounts to CHF 10.3 million. This restated equity serves as the asset-based value component in the practitioners' method, combined with the earnings value to produce the overall valuation conclusion.

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Hectelion analyses both statutory and economic equity in Swiss and French companies to produce accurate, market-consistent valuations.