We value shares in private companies for transfers, gifts, exits, tax returns, employee share schemes and disputes. Each valuation starts with the company and then considers what the particular holding entitles its owner to receive and decide.
When is this valuation required?
- Shares are being transferred, gifted or sold between shareholders.
- A shareholder is leaving and the articles or a shareholder agreement require a valuation.
- HMRC requires a market value for capital gains tax, inheritance tax or employment tax purposes.
- Shares are being issued to employees or under an incentive scheme.
- Shareholders disagree about the value of a holding.
Who instructs us?
- Shareholders and directors
- Accountants and tax advisers
- Corporate and dispute resolution solicitors
- Executors, trustees and family members
What exactly is valued?
We value ordinary shares, minority and majority holdings, preference shares, growth shares and other classes, as well as interests in partnerships and LLPs. The starting point is always the company's articles of association, any shareholder agreement and the rights each class carries to income, capital, votes and transfer.
How is value assessed?
First, we value the company as a whole using the approach appropriate to its business. Second, we consider how that value is shared between the classes of shares. Third, we consider the particular holding: what it controls, what it receives and how easily it could be sold.
For a non-controlling holding, it may be appropriate to reflect the lack of control and lack of marketability, sometimes through a discount and sometimes by valuing the holding by reference to expected dividends. Whether any discount applies, and how large it should be, depends on the purpose, the basis of value and the facts. There is no standard percentage.
How the approaches are usually weighed
Typical
- IncomeMaintainable earnings or discounted cash flowUsual starting point
- MarketComparable transactions and companiesCross-check
- AssetAdjusted net assetsWhere relevant
Why the purpose changes the answer
A tax valuation applies the statutory definition of market value. A valuation under a company's articles may require "fair value" as defined in that document, which can exclude any minority discount. A court in a shareholder dispute may order a valuation on a pro rata basis. The same holding can therefore carry different values for different purposes, and we always confirm which basis applies.
What factors influence the result?
- Size of holding
- Thresholds such as 25%, 50% and 75% affect the ability to block resolutions, control the board or pass special resolutions.
- Shareholder agreements
- Pre-emption rights, drag and tag provisions, leaver clauses and valuation mechanisms.
- Dividend history
- Whether the company pays regular dividends that a minority holder can expect to receive.
- Marketability
- Private company shares are usually harder to sell, especially where transfers are restricted.
- Share classes
- Rights to dividends, capital, liquidation preferences and conversion.
- Basis of value
- Market value, fair value under the articles or a court-directed basis.
What information is required?
- Articles of association and any shareholder or investment agreement
- The share register and capitalisation table
- Company accounts, management accounts and forecasts
- Dividend history
- Details of the transaction or purpose requiring the valuation
We send a tailored information request once the scope is agreed.
What report will you receive?
Share valuation reports explain the company valuation, the rights attached to the shares, the approach to the holding and any adjustment for control or marketability, with the reasoning for each step.
See types of business valuation reports for how the scope of each type differs.
Timing and cost
How long will it take?
Once the company valuation is complete, valuing a particular holding adds relatively little time, provided the constitutional documents are clear. Complex share structures with several classes take longer.
How much does it cost?
Fees depend on the company's complexity, the number of share classes and the purpose. We quote in writing once we understand the structure.
How our fees are set →Frequently asked questions
How are private company shares valued?
By valuing the company, considering how value is shared between share classes, and then assessing the rights and marketability of the specific holding for the purpose of the valuation.
Is a minority shareholding always discounted?
No. Whether a discount applies depends on the purpose, the basis of value and the facts. Some articles require a pro rata value; some courts order one; tax valuations generally consider the holding as it is. The size of any discount is a matter of judgement, not a fixed percentage.
What is the difference between market value and fair value for shares?
Market value is the price a hypothetical willing buyer would pay a willing seller. "Fair value" in articles of association means whatever the articles define it to mean, which can differ. In financial reporting, fair value has a specific accounting meaning.
Can you value different classes of shares?
Yes. We analyse the rights of each class and allocate value accordingly, which is particularly important for growth shares, preference shares and investor equity.
Can you value a 50% shareholding?
Yes. A 50% holding typically has the power to block decisions but not to control them, which places it between a minority and a controlling interest. The particular facts matter.
