We value shares for employee share schemes and incentive arrangements, working alongside the advisers who design and document them.
When is this valuation required?
- Options are granted under a company share option plan (CSOP).
- Growth shares or another special class is being issued to managers.
- Unapproved options or direct share awards are being made.
- Shares are being acquired by employees and employment tax depends on their value.
- A share incentive plan or save-as-you-earn scheme requires a value for unlisted shares.
Who instructs us?
- Founders, boards and remuneration committees
- Share scheme advisers and accountants
- Employment and corporate solicitors
What exactly is valued?
The shares, options or special class awarded to employees. For ordinary shares, this is usually a small holding without control. For growth shares, it is a class whose value depends on the company's value rising above a hurdle, which requires a different approach.
How is value assessed?
Ordinary shares are valued by first valuing the company, then allocating value across the share structure and considering the size and rights of the holding. Growth shares and other hurdle-based classes are usually valued by modelling how much of the company's future value the class could receive in different outcomes, since their value today reflects the possibility of future growth.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings or discounted cash flowUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetAdjusted net assetsWhere relevant
Schemes we cover
The valuation principles are similar across schemes, but the relevant dates, values and tax rules differ. Your adviser confirms the rules for your scheme; we provide a valuation that answers the question those rules ask.
- Company share option plans (CSOP)
- Growth shares and hurdle shares
- Unapproved share options
- Share incentive plans (SIP) and save-as-you-earn (SAYE) for unlisted companies
- Joint share ownership arrangements
- Direct share awards and management equity
What factors influence the result?
- Scheme rules
- The date and basis on which value must be measured.
- Hurdles
- For growth shares, how far the company must grow before the class participates.
- Investor preferences
- Rights of other classes that rank ahead of employee shares.
- Restrictions
- Leaver and transfer provisions affecting restricted and unrestricted values.
- Exit horizon
- Expected timing of a sale or listing.
What information is required?
- Scheme documents, articles and the cap table
- Accounts, forecasts and funding history
- Details of the proposed awards and dates
- Terms of any special share class
We send a tailored information request once the scope is agreed.
What report will you receive?
We provide a valuation report suitable for the scheme's purpose and for submission to HMRC where required, explaining the approach and the values relevant to the scheme rules.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Timing depends on the scheme and the share structure. Growth share valuations involve modelling and generally take longer than valuations of ordinary shares.
How much does it cost?
Fees depend on the scheme, the number of classes and the complexity of any hurdle or performance conditions. We quote in writing in advance.
How our fees are set →Frequently asked questions
How are growth shares valued?
By modelling the share of future company value the growth shares could receive above their hurdle, across a range of possible outcomes, and considering the rights and restrictions attached.
What valuation does a CSOP need?
CSOP options must generally be granted at an exercise price not less than the market value of the shares at grant. A valuation establishes that market value; your adviser confirms the scheme requirements.
Do you value SIP and SAYE shares?
Yes, for unlisted companies operating these plans. Separate dedicated pages may be added where demand justifies them; the valuation principles are covered here.
When do you need an independent share scheme valuation?
Whenever the tax treatment depends on market value and there is no market price, which is the case for most private companies. An independent valuation reduces the risk of a later challenge.
Can you value options themselves, not just the shares?
Yes, where required, for example for accounting purposes. Option valuation considers the exercise price, the term and the volatility of the underlying shares.
