How Much Is My Business Worth? Methods, Multiples & Valuation

Introduction: The Question Every Business Owner Eventually Asks

The value of a business is one of the most structurally important questions a business owner can ask — and one of the most misunderstood. In family-owned SMEs as in growth companies, value is often perceived as an intuitive figure: what the owner invested, what a peer obtained for a similar business, or what the accountant mentioned at the last year-end meeting. These reference points are useful. They are not sufficient.

Enterprise value — in financial terms — is the value that an informed buyer would agree to pay, under normal market conditions, to acquire all the economic assets of the company. This definition, which appears straightforward, conceals a complex reality: value depends on the transaction context, the method applied, the financial assumptions, the acquirer's profile, and the discounts or premiums applicable to the situation.

As Aswath Damodaran, Professor of Finance at the Stern School of Business in New York, notes: "Value is not a number — it is a range. And every range rests on assumptions. The quality of a valuation is measured by the rigour of those assumptions, not by the precision of the final figure." (Damodaran, The Little Book of Valuation, Wiley, 2011.)

The question most business owners ask — "How much is my business worth?" — actually encompasses three distinct questions: what is the objective economic value of my business today? What price can I reasonably expect in a sale? And what is the value of my shares in a specific context — divorce, succession, shareholders agreement, fundraising? These questions do not have the same answer, which is precisely what makes business valuation both necessary and complex.

This article provides a structured answer to these three questions. We will examine in turn the origins and foundations of business valuation, the key definitions — including net financial debt —, the application contexts, the six recognised methods in France and Switzerland with sourced sector multiples, the indispensable adjustments, the discounts applicable to SMEs, the advantages and limitations of independent valuation, and two quantified case studies illustrating the approach.

Origins and Foundations of Business Valuation

Business valuation as an autonomous discipline developed progressively from the 1960s, following the foundational work of Modigliani and Miller on capital structure (1958), and of Sharpe and Lintner on the Capital Asset Pricing Model (1964-1965).

In France, the doctrine is governed by BOFIP recommendations and SFEV professional standards.

In Switzerland, the practitioners' method is recognised by cantonal courts and tax authorities (CSI Circular No. 28). Both frameworks are presented in detail in our article on business valuation approaches and methods.

Definition: What Is Business Value?

Business value is expressed in two complementary forms.

Enterprise Value (EV) represents the total value of a company's economic assets, independently of its financial structure. This is the basis on which valuation multiples are expressed (EV/EBITDA, EV/Revenue, EV/EBIT).

Equity Value represents what accrues to shareholders after deducting net financial debt:

Equity Value = Enterprise Value − Net Financial Debt + Surplus Cash

Definition of Net Financial Debt

Net financial debt (NFD) is a central concept in any valuation:

NFD = Gross Financial Debt − Available Cash

Gross financial debt includes bank and bond borrowings, capitalised leases (IFRS 16), financial lease obligations, remunerated shareholder current accounts and identified off-balance-sheet commitments (unfunded social liabilities, probable litigation).

Adjusted NFD is the key indicator in any financial due diligence report — it directly determines the price effectively paid by the acquirer. It is also at the heart of the Locked-box vs Completion Accounts mechanisms.

Application Context: When Is a Business Valued?

Full or partial sale — the most frequent context in Hectelion's practice. See our article on the business sale process.

Fundraising — valuation determines the subscription price and dilution. See our article on startup development stages.

Shareholders agreement — exit clauses require a precisely defined valuation formula. Our article on the shareholders agreement: valuation and exit clauses details these mechanisms.

Divorce or succession — see our dedicated article: business valuation in a divorce.

Acquisition — the acquirer verifies the coherence of the asking price. See our article on the acquisition process.

Taxation — IFI in France, wealth tax in Switzerland: the tax value of shares must be justified by a recognised and documented method.

Methodology: The Recognised Valuation Methods

A — Transaction Comparables (EV/EBITDA, EV/Revenue, EV/EBIT)

This is the most widely used method in the Franco-Swiss mid-market. The most common multiples are EV/EBITDA (the most prevalent), EV/Revenue (for loss-making or SaaS companies) and EV/EBIT (where depreciation levels differ significantly between comparables).

According to the Argos Index® / Epsilon Research, the median EV/EBITDA multiple for unlisted eurozone SMEs stands at 8.3× in Q4 2025, its lowest level since 2014. For Swiss SMEs, Berney Associés indicates materially lower multiples, averaging between 5× and 7× (Berney Associés, Market Multiples at a Glance, 2025).

B — Direct Market Multiples (P/E, P/BV)

Direct market multiples are based on the valuation ratios of comparable listed companies.

The P/E ratio (Price-to-Earnings) indicates how much the market pays for one unit of net profit — relevant for mature, profitable companies.

The P/BV ratio (Price-to-Book Value) compares market capitalisation to net book value — relevant for holding companies and real estate. A mandatory illiquidity discount must be applied (see discounts chapter).

C — Indirect Market Multiples (EV/Revenue, EV/EBITDA, EV/EBIT on listed companies)

This approach uses EV/aggregate ratios of comparable listed companies to value an unlisted target. It is particularly used for growth companies or sectors where transaction comparables are scarce. An illiquidity discount of 20% to 40% is systematically applied.

D — DCF (Discounted Cash Flows)

The DCF discounts projected free cash flows at the weighted average cost of capital (WACC).

It is the most rigorous method theoretically, and the most sensitive to assumptions.

A one-percentage-point change in WACC or the terminal growth rate can shift the valuation by 20% to 40% or more — which explains why a sensitivity table is an indispensable deliverable in any serious DCF report. (Source: FinancePlots, DCF Valuation Guide, 2025.)

E — The Practitioners' Method (Switzerland)

Recognised by Swiss cantonal courts and tax authorities (CSI Circular No. 28):

Practitioners' Value = (1 × Substantial Value + 2 × Earnings Value) / 3

The earnings value is capitalised at the CSI rate (8.75% in 2024).

This is the de facto reference for Swiss SMEs in contexts of divorce, succession and shareholders agreements. See our comparative article: business valuation: France vs Switzerland.

F — Adjusted Net Asset Value (ANAV)

Floor method: it revalues assets at market value and deducts actual liabilities. Relevant for holding companies, real estate companies and asset-light businesses.

Indispensable Adjustments Before Any Valuation

An SME's value cannot be read directly from its accounts. It is calculated after adjustments: owner's compensation at market rates, mixed-use expenses to be added back (vehicles, intra-group rents), non-recurring items to neutralise, adjusted NFD (gross debt, IFRS 16 leases, remunerated shareholder accounts, off-balance-sheet commitments) and surplus cash (beyond 2 months of revenue). These adjustments are detailed in our article on financial due diligence.

Discounts Applicable to SME Valuation

Discounts are downward adjustments applied to the theoretical value to account for specific characteristics. They are developed in detail in our article on business valuation premiums and discounts.

The illiquidity discount (20% to 40%) is the most systematic in the valuation of unlisted SMEs. It reflects the absence of an organised market allowing a rapid exit, and is particularly applied when using market comparables.

The minority discount (15% to 40%) applies when a valuation concerns a minority stake. It reflects the minority shareholder's lack of decision-making power. Conversely, a control premium of 15% to 30% applies to an acquirer obtaining control.

The holding discount (10% to 30%) applies when a holding company holds stakes in subsidiaries, to account for structural costs, dividend taxation and divestment complexity.

The key-person dependency discount reflects the risk of value loss linked to the departure of the founding owner. Common in family SMEs, it must be justified and must not already be integrated into the discount rate.

See also our article on the size premium: WACC and business valuation.

Advantages and Limitations

What an Independent Valuation Provides

An independent, documented valuation allows you to enter negotiations from a defensible position. Business owners who negotiate without a prior valuation are structurally at a disadvantage against an acquirer who has engaged their own financial advisers.

In a constrained context — divorce, succession, conflict governed by a shareholders agreement — a formalised valuation report signed by an independent expert is the only document accepted by courts and tax authorities in both countries.

In a financial structuring process (LBO, OBO), the valuation determines the level of leverage acceptable to banks and the expected return for investors.

Finally, a rigorous valuation conducted two to three years before a sale allows identification of value levers to activate: reducing key-person dependency, diversifying the client base, improving revenue recurrence.

Limitations to Be Aware Of

No method produces an absolute value. Enterprise value is always a range, the breadth of which reflects uncertainty in the assumptions. A strategic buyer paying for synergies will structurally pay more than a financial fund — market value and transaction price can diverge by 20% to 40%.

Sector multiples are market indicators, not certainties. It is precisely the role of premiums and discounts to correct these approximations.

Furthermore, transaction multiple data primarily reflects deals where the price was made public — typically the largest — and under-represents the lower end of the mid-market.

Finally, the DCF is inherently sensitive to assumptions and can be manipulated by a less rigorous evaluator. The independence of the evaluator is a non-negotiable condition.

Examples and Case Studies

Case 1 — Swiss Industrial SME (fictitious names)

Company C Sàrl, precision components manufacturer, canton of Vaud. Revenue: CHF 4.2M. Accounting EBITDA: CHF 620k. After adjustments (compensation +80k, mixed expenses +35k, intra-group rent +20k): Normalised EBITDA = CHF 755k.

Practitioners' method (CSI 8.75%):

Earnings value = CHF 8,629k

Substantial value = CHF 3,200k

Practitioners' value = CHF 6,819k.

Transaction comparables (5.5×): EV = CHF 4,153k.

After size and key-person dependency discounts: retained valuation range: CHF 3.8M to CHF 6.2M.

Case 2 — French Consulting Firm (fictitious names)

Company D SAS, digital transformation consulting, Île-de-France.

Revenue: €3.1M. Normalised EBITDA: €520k.

Growth: +18%. Revenue recurrence: 65%.

DCF (WACC 11.5%): EV = €4,850k. Comparables (7.0×): EV = €3,640k.

Indirect market multiples (9.0×, 30% discount): EV = €3,276k.

‍Retained range: €3.3M to €4.9M.

CEO Message

"How much is my business worth?" is the question we receive most frequently at Hectelion. And paradoxically, it is the one that requires the most candour to answer honestly.

Candour, because the answer some business owners hope for — a high figure that validates their years of effort — is not always the answer market data produces. The value of a business is not the reward for years of work: it is the price a rational, informed buyer would agree to pay today to acquire your future cash flows. These two things do not always coincide.

What we observe consistently in our practice: business owners who enter negotiations without a prior independent valuation leave money on the table. Conversely, those who come prepared with a rigorous, sourced and defensible report negotiate from a position of strength. They do not accept the acquirer's first figure. They understand the logic, and they know where and why to challenge it.

What we also observe is that a valuation is rarely the conclusion of a process — it is the starting point. A business owner who commissions a valuation two to three years before a sale has a window to act on value levers: reducing key-person dependency, diversifying the client base, improving revenue recurrence, strengthening management. These actions can shift a multiple from 5× to 7×. On an EBITDA base of CHF 800k, that represents CHF 1.6M in additional value created.

Our role at Hectelion is not to produce the highest possible value to meet the owner's expectations. It is to produce the most defensible value possible — one that will withstand scrutiny from a counter-expert, a court, an investment committee or a tax authority.

Aristide Ruot, Ph.D — Founder & Managing Director, Hectelion

FAQ — Frequently Asked Questions on Business Valuation

What is the average EV/EBITDA multiple for an SME in France in 2025?

According to the Argos Index® / Epsilon Research, the median EV/EBITDA multiple for unlisted eurozone SMEs stands at 8.3× in Q4 2025. This figure covers the mid-market segment (enterprise value between €15M and €500M). For smaller SMEs — enterprise value below €15M — multiples are structurally lower, due to the size premium and specific risk. An independent expert systematically applies these adjustments before concluding on a valuation range.

How do I calculate the value of my business for a sale?

The recommended approach rests on three steps. First, calculate normalised EBITDA after adjustments (owner's compensation, mixed expenses, non-recurring items). Second, apply a sector market multiple to obtain enterprise value (EV). Third, deduct net financial debt and add surplus cash to obtain equity value. Triangulation with a DCF and, where applicable, the practitioners' method in Switzerland, consolidates the valuation range. See our detailed approach: business valuation: approaches and methods.

What is the difference between enterprise value and sale price?

Enterprise value is the result of a financial analysis based on recognised methods. The sale price is the amount effectively paid in a transaction, after negotiation. These two figures can diverge by 20% to 40% depending on the acquirer's profile (strategic vs financial), expected synergies and market conditions.

Can my business be valued differently in France and Switzerland?

Yes, significantly.

In France, transaction comparables and DCF dominate M&A practice.

In Switzerland, the practitioners' method — combining earnings value and substantial value per CSI Circular No. 28 — is the reference for tax, judicial and shareholders agreement contexts.

Transaction multiples observed on Swiss SMEs are structurally below those of the eurozone (5× to 7× vs 8.3× median). See: business valuation: France vs Switzerland.

How much does an independent business valuation cost?

For a standard-sized SME (revenue between €2M and €20M/CHF), a rigorous valuation generally falls between €3,000 and €15,000/CHF depending on complexity and context.

This cost should be set against the stakes: on a €5M sale, a better-prepared negotiation can represent several hundred thousand euros of additional value.

Contact Hectelion for a confidential initial discussion.

Can I value my business myself?

An indicative pre-valuation is possible — Hectelion offers a free indicative valuation tool directly on the website.

However, an opposable valuation — usable in a sale negotiation, a judicial context or a tax procedure — requires an independent expert, a documented methodology and a professional signature.

Conclusion: How Much Is My Business Worth?

Business value is the result of rigorous analysis, grounded in complementary methods, sourced market data and documented adjustments. For a business owner considering a sale, a transfer, an OBO or LBO, this approach relies on a triangulation of methods — DCF, transaction multiples, market multiples, practitioners' method — whose convergent results produce a defensible range before an acquirer, a court or a tax authority.

At Hectelion, an independent advisory firm active in France and Switzerland, we conduct valuations in all contexts — sale, fundraising, divorce, succession, shareholders agreement, taxation.

Contact us for a confidential initial analysis.

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Author

Aristide Ruot, Ph.D

Founder | Managing Director