We value private limited companies of all sizes, from single-director businesses to multi-company groups, and from trading companies to holding and investment companies. The output is a value for the company's equity, or for a particular holding in it, prepared for the purpose you need.
When is this valuation required?
- Directors need to understand the value of the company before a sale, investment or reorganisation.
- Shares are being transferred, issued or bought back.
- A holding company is being inserted above a trading company, or a group is being restructured.
- A subsidiary or division is being sold or transferred within a group.
- Advisers need a valuation for tax, probate or proceedings.
Who instructs us?
- Company directors and shareholders
- Finance directors and group finance teams
- Accountants, tax advisers and corporate solicitors
- Investors and acquirers
What exactly is valued?
Trading companies are usually valued by reference to their earnings or cash flows. Holding companies are valued by looking through to the underlying subsidiaries and investments, then considering costs and liabilities at holding-company level. Investment companies, whose value comes mainly from assets such as property or securities, are typically valued with greater weight on their net assets.
Many companies are a mixture: a trading business that also owns its premises or holds substantial surplus cash. We separate the trading and non-trading elements, value each appropriately and bring them together, so it is clear where the value sits.
How is value assessed?
We begin with the company's legal and financial structure: the share capital, the group chart, the rights attached to each class of share and the balances between group companies and their directors. We then analyse trading performance, normalise earnings for items that would not continue under different ownership, and consider the company's balance sheet in detail.
The chosen method depends on what drives value. For a profitable trading group, we typically use earnings-based approaches, cross-checked against market evidence. For holding and investment companies, net asset approaches are often more appropriate, with consideration of any latent tax on gains and the costs of realising assets.
How the approaches are usually weighed
Typical
- IncomeEarnings-based approaches for trading groupsUsual starting point
- MarketMarket evidenceCross-check
- AssetNet assets, for holding and investment companiesWhere relevant
What factors influence the result?
- Group structure
- Intra-group loans, guarantees and trading relationships, and where value and risk sit within the group.
- Director loan accounts
- Amounts owed to or by directors are part of the bridge from enterprise value to equity value.
- Surplus and non-trading assets
- Cash, property and investments not needed for the trade are usually valued separately.
- Share rights
- Different classes of shares may carry different rights to dividends, capital and votes.
- Latent tax
- Where assets stand at a gain, the tax that would arise on realisation may be relevant to value.
What information is required?
- Statutory and management accounts for each relevant company
- A group structure chart and the share register
- Articles of association and any shareholder agreements
- Details of intra-group and director balances
- Property, investment and loan information
- Forecasts and budgets where available
We send a tailored information request once the scope is agreed.
What report will you receive?
Reports set out the company's structure, the approach taken to each element, the bridge from business value to equity value, and the value of the shares or holding concerned. Where the valuation is for a specific purpose such as tax, the basis of value and supporting analysis are tailored to it.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Single-company valuations can usually be completed more quickly than group valuations, which require analysis of each entity and the balances between them. We agree the timetable once we have seen the structure and the available information.
How much does it cost?
Fees reflect the number of entities, the complexity of the share structure, the purpose and the level of reporting. A written fee proposal is provided before work begins.
How our fees are set →Frequently asked questions
Is a company valuation different from a business valuation?
Often the terms are used interchangeably. Strictly, a business valuation looks at the trade, while a company valuation looks at the legal entity and its shares, including surplus assets, debt and other items. Most instructions require both steps.
How do you value a holding company?
By valuing the underlying subsidiaries and investments, then adjusting for the holding company's own assets, liabilities and costs. The rights of the shares being valued are then considered.
Do director loans affect the valuation?
Yes. A loan from a director to the company is usually treated like debt, reducing equity value. A loan from the company to a director is an asset, although its recoverability may need to be considered.
Can you value a dormant or non-trading company?
Yes. Such companies are usually valued on the basis of their net assets, adjusted where appropriate for realisation costs and tax.
Can you value one company within a group?
Yes. We consider its standalone performance, its dependence on other group companies and any intra-group arrangements that would change if it left the group.
