Valuing a French Business Goodwill in 2026: Methods and Drivers

Updated 12 May 2026. Valuing a French business goodwill (fonds de commerce) goes well beyond reading a sector benchmark off a trade association sheet. The 2026 practice combines five complementary methods — professional benchmarks, EBITDA multiples, discounted cash flows, adjusted net assets and earnings capitalisation — weighted by the maturity of the company. At the heart of the valuation, two variables determine the defensible price in front of a buyer and their banker: the normalised EBITDA after restatements, and the strength of the commercial lease. At Cabinet Hayot Expertise in Paris, we regularly see 30 to 50% gaps between the headline "benchmark" value and the economic value a bank actually finances.

Intangible and Tangible Components (Article L141-1 Commercial Code)#

A French goodwill is a legal universality without legal personality, whose sale is governed by Articles L141-1 to L141-22 of the Commercial Code. It aggregates intangible elements — customer base, going-concern attractiveness, trade name, sign, lease rights, patents, licences, trademarks, key commercial contracts — and tangible elements — equipment, fittings, tools. Stocks and trade receivables are in practice transferred separately and are not included in the goodwill value. This distinction is central because it dictates the valuation perimeter and the registration duties of Article 719 of the French Tax Code (CGI).

Customer Base, the Essential Element under the Court of Cassation#

The settled case law of the Commercial Chamber of the Court of Cassation (notably 27 February 1973 and 1995) holds that without an attached customer base, there is no goodwill. This rule has decisive practical consequences: a vacant premises, a sign without footfall, or a seasonal activity without regulars does not constitute a transferable goodwill. The valuation must therefore demonstrate the reality, stability and transferability of the customer base — structured client file, repeat-purchase rate, controlled owner dependency.

Goodwill vs Company Shares: Two Different Sales#

Selling the goodwill transfers only the business activity, excluding bank accounts, financial debts and financial investments. Selling shares (actions or parts) transfers the entire company, assets and liabilities included. From the buyer's perspective, the goodwill offers the security of no liability assumption, while shares ensure automatic continuity of clients, contracts and authorisations. On the tax side, the goodwill sale bears the progressive scale of Article 719 CGI (0% up to €23K, 3% from €23K to €200K, 5% above), while a share sale falls under 0.1% for SAS and 3% with a €23K rebate for SARL. Our analysis of the definitive sale agreement details the signing/closing consequences of this choice.

Benchmarks in % of Net Turnover by Sector#

Professional benchmarks — published by the Paris Notaries Chamber, the High Council of the Order of Chartered Accountants (CSOEC), industry unions and federations — provide a valuation range expressed as a percentage of the average net turnover (HT) over the last three financial years. The most-used 2026 ranges:

• Bakery-pastry shop: 60% to 100% of net turnover
• Traditional restaurant: 50% to 80% of net turnover
• Café-bar with Class IV licence: 70% to 110% of net turnover
• Pharmacy: 80% to 110% of net turnover (CNOP benchmark)
• Hotel: 100% to 180% of net turnover, sometimes expressed per room
• Hair salon: 50% to 90% of net turnover
• Tobacconist: 8 to 12 months of net commission
• Dry cleaning and laundry: 70% to 100% of net turnover
• Auto garage: 35% to 70% of net turnover
• Driving school: 70% to 150% of net turnover depending on permits

Sources — Notaries Chamber, CSOEC, Industry Unions#

In Paris, the Notaries Chamber publishes an annual goodwill barometer cross-referencing transactions registered in Paris notarial offices. The CSOEC issues methodological notes on valuation, and each industry union (UMIH for hospitality, FNB for bakeries, Tobacconist Confederation) maintains its own references. The private databases Argus de l'Enseigne and FCEU aggregate concluded transactions, making them finer market comparables than theoretical benchmarks.

Limits and Necessary Adjustments#

A benchmark remains an indicator, never a verdict. It must be adjusted downward for a precarious commercial lease, overvalued rent, a fragile team or excessive dependency on the outgoing director. It adjusts upward for a prime location (Paris first, second, sixth, seventh, eighth, sixteenth arrondissements), a recently renewed 3-6-9 lease, a rare licence or active digital presence (Google rating above 4, followed social networks). Without these corrections, the benchmark produces a price the buyer's bank cannot finance.

EBITDA Multiple 3-7x by Profile#

The most-used method in professional transactions remains the EBITDA multiple — or its French accounting equivalent, EBE. The 2026 ranges observed on TPE-SME deals:

• Classic TPE (turnover below €2M): 3 to 4x normalised EBE
• Established SME (turnover €2M to €20M): 4 to 6x EBITDA
• High-growth scale-up or recurring business model: 6 to 10x EBITDA

EBITDA must be normalised before applying the multiple: restate excessive director compensation (and spouse), remove personal expenses, eliminate exceptional income and charges, reclassify finance leases as debt. Without normalisation, the multiple amplifies anomalies and distorts the valuation.

Turnover Multiple 0.5x to 2x#

The turnover multiple (0.5x to 2x annual net turnover) is less reliable than the EBITDA multiple because it ignores margin. It remains used as a cross-check tool or for activities with sector-stabilised margins (pharmacy, tobacconist, franchised hair salon). For a diversified Paris SME, the EBITDA multiple remains the reference standard at the negotiation table.

Sources of Comparable Transactions (Argus, FCEU)#

The Argus de l'Enseigne and FCEU databases, along with PwC, KPMG and OEC industry studies, provide historical multiples by sector, size and geography. In central Paris, observed multiples are structurally 0.5 to 1 turn higher than the national average due to the location premium and market liquidity. A serious valuation cites at least three comparable transactions from the last 24 months.

5-Year Projection and Terminal Value#

The Discounted Cash Flow method (DCF) projects operating cash flows over five financial years, then calculates a terminal value using the Gordon-Shapiro formula (perpetual growth flow divided by WACC minus g). The whole is brought back to present value at the weighted average cost of capital. DCF is the preferred method for growing companies, whose past performance does not reflect future potential.

WACC for French TPE/SME in 2026: 10-15%#

The weighted average cost of capital (WACC) of a French TPE-SME in 2026 sits between 10 and 15%, reflecting the cost of equity (market risk premium 6-7%, sector beta, size premium, liquidity premium) weighted with the after-tax cost of debt. A stable, low-debt Paris SME in a defensive sector can drop to 9-11%; a tech scale-up with high operational risk rises to 14-18%. The WACC choice is the most sensitive DCF assumption — a 1-point variation changes the terminal value by 10 to 20%.

When DCF Is More Relevant#

DCF is relevant for companies in sustained growth (turnover up at least 15% per year), business models with high intellectual capital (software, biotech, value-added services), and post-investment companies where significant cash flows are yet to materialise. It is less suited to stable boutique goodwill assets (neighbourhood bakery, local restaurant) where the EBE multiple speaks more directly to buyers and their bankers.

Asset Revaluation at Fair Value#

The Adjusted Net Asset method (ANC, Adjusted Net Asset Value) revalues each balance sheet item at fair market value: operating real estate at market value, stocks at realisation price, receivables after impairment of doubtful items, debts adjusted for off-balance-sheet commitments. ANC = revalued assets minus revalued debts. This method is codified in CSOEC doctrine and notably used for contributions in kind subject to a contributions auditor.

Suited to Asset-Heavy Companies#

ANC suits structures with high real estate or material intensity: patrimonial holding companies, real estate companies, processing industries, garages with owned workshops. For a corporate-taxed SCI holding a Paris building, the ANC directly reflects the economic value. Our guide on holding companies and tax optimisation details the articulation between ANC value and group strategy.

Limits for High-Goodwill Companies#

ANC systematically undervalues companies with strong goodwill — that is, those whose value lies in the customer base, brand or team rather than tangible assets. A Paris consulting firm, digital agency or premium bakery has almost no balance sheet assets; yet their market value can reach 5 to 8 times their ANC. In these cases, ANC serves as a negotiation floor rather than a reference value.

Capitalisation of Average Net Earnings#

The earnings capitalisation method takes the arithmetic average of normalised net income over the last three to five financial years, divided by a capitalisation rate (8 to 15% for 2026 depending on risk profile). It remains widely used for mature, stable companies whose past earnings are a good indicator of future flows. The capitalisation rate is the inverse of a PER multiple: a 10% rate equals a 10x net earnings multiple.

CSOEC Weighting of the 5 Methods#

The High Council of the Order of Chartered Accountants recommends a multi-criteria approach: apply several methods in parallel, then weight the results by the company's nature and maturity. For a stable Paris bakery, the typical weighting is 40% benchmark, 30% EBE multiple, 20% earnings capitalisation, 10% ANC. For a SaaS scale-up, the weighting becomes 50% DCF, 30% EBITDA multiple, 20% transaction comparables.

Output — Minimum, Central, Maximum Range#

A rigorous valuation report produces not a single figure but a value range: minimum value (most prudent method), central value (weighted average of methods), maximum value (most favourable method). This range serves as the negotiation starting point. The sell-side mandate typically positions at maximum value, the first buyer offer at minimum value, and the concluded price approaches the central value.

Location, Lease, Customer Base, Growth#

Factors that increase goodwill value: prime location (in Paris, first, sixth, seventh, eighth, sixteenth arrondissements), over five years of trading history, secure 3-6-9 commercial lease with at least four years remaining and market-aligned rent, loyal and diversified customer base (no dependency above 20% on a single client), three-year growth in turnover and EBITDA, stable team with at least two key employees, sustainable commercial contracts, rare licences and authorisations (Class IV, pharmacy permit, transport permit).

Team, Licences, Brand, Digital#

To these structural factors are added intangible elements now decisive in 2026: locally recognised brand or sign, active digital presence (Google rating above 4 across at least 100 reviews, social networks with qualified audience), optimised local SEO, recent compliant equipment, quality certifications (HACCP, ISO, organic label). A Paris goodwill with these strengths sells 15 to 30% higher than an equivalent without credible digital presence.

Owner Dependency, Wear, Litigation#

Factors that decrease value: precarious commercial lease, overvalued rent, excessive dependency on a single client or supplier, declining turnover, high debt (to be assumed in a share deal), worn premises requiring refurbishment, ongoing litigation (employment, commercial, tax), strong dependency on the outgoing director without team backup, increased zone competition, unfavourable regulatory changes (pedestrian zones, energy norms, hour restrictions).

Pharmacy — CNOP Benchmark and Licence#

Pharmacy valuation follows the National Council of the Order of Pharmacists (CNOP) benchmark, combining licence value (numerus clausus), percentage of gross turnover (80 to 110%), location quality and customer base composition (pharmacy, parapharmacy, common medication). In Paris, recent transactions show 110 to 130% of gross turnover for high-flow pharmacies. The licence alone represents 40 to 60% of total value.

Tobacconist — Annual Commission x Multiplier#

Tobacconist valuation is expressed in months of net commission: 8 to 12 months depending on location, trading history and ancillary activities (gaming, press, French lottery, horse racing). The National Tobacconists Convention sets the framework, and the transfer requires Customs approval. In Paris, multiples are at the top of the range due to high foot traffic.

Restaurants, Hotels, Hair Salons#

Traditional restaurants are valued at 50 to 80% of net turnover, with a premium for Class IV licence and terrace. Bistronomy and gastronomy add a premium tied to chef reputation — sometimes contractually retained through a presence clause. Hotels are often valued per room, with unit prices ranging from €80K to €250K depending on category and Paris arrondissement. Hair salons transfer at 50-90% of net turnover, with adjustment for customer loyalty and team renown.

Free Engagement and Engagement Letter#

Goodwill or company valuation falls within the consulting missions open to chartered accountants under Article 22 of Ordinance No. 45-2138 of 19 September 1945. It is a free engagement governed by a specific engagement letter setting out the scope (methods applied, audited or unaudited file, level of assurance), the deliverables (argued valuation report, value range, recommendations) and fees. The engagement does not produce an audit opinion but a supported conclusion report.

Fees €3K-€15K for TPE/SME#

Articulation with the Contributions Auditor#

When a goodwill is contributed to an SAS or SARL, Article L227-1 paragraph 5 of the Commercial Code (or L223-9 for SARL) requires the appointment of a contributions auditor to report on the value of contributions in kind. This engagement, distinct from a free valuation, is entrusted to a registered statutory auditor. The prior valuation produced by the chartered accountant feeds the contributions auditor's work and accelerates the procedure.

The Trade-off — Dominant Method by Profile#

The arbitration we consistently run with our Paris clients rests on three criteria: company maturity (mature, growing, hyper-growth), activity nature (boutique, services, industrial, tech), and valuation purpose (sale, financing, director insurance, succession). For a neighbourhood bakery, the CNB benchmark weighted by the EBE multiple suffices. For a SaaS scale-up, only DCF coupled with transaction comparables speaks to investors and bankers. For a patrimonial holding, ANC remains the reference.

The Underestimated Risk — Benchmark Alone Without Normalised EBITDA#

The risk we see recurring in every pre-sale file: a seller calculating value by applying the "high range" sector benchmark to gross turnover, without normalising EBITDA. In nine cases out of ten, director compensation is undervalued, private expenses are mixed into operations, and exceptional positives inflate the result. Once normalised, the real EBITDA is 20 to 40% lower than reported, and the value defensible before the buyer's bank falls accordingly. To prepare a smooth family transmission or a credible financing dossier, the valuation report must always start from a restated, dated, signed EBITDA. Our Paris 8 accounting and audit team builds this base with you, upstream of any market approach.