Business valuation: methods, multiples and 2026 tax guide

In short: valuing a company means estimating its economic value by combining several methods - asset-based (adjusted net assets), earnings multiples (EBE, EBITDA) and discounted cash flows (DCF). The result is a defensible range, not a single figure, and that value is not the price, which is set through negotiation. For a profitable SME, you usually combine an EBITDA multiple (4 to 7x by sector in 2026) with a DCF, then deduct net debt to reach equity value.

Business valuation both fascinates and worries owners. Many want to know "the value" of their company as if a single, stable, indisputable figure existed. In practice it never does. A valuation is neither a trophy nor a purely theoretical exercise: it is a negotiation baseline, a governance tool and, often, the starting point of a sensitive operation (sale, transfer, investor entry, dispute).

This guide is written for the owner who wants to understand what their company is worth, for anyone preparing a valuation engagement (seller, buyer, director, adviser), and for anyone who must commission a valuation report without being told a story. You will find the methods, the formulas, the sector benchmarks, the 2026 tax treatment that follows, the concrete steps of an engagement and its cost. The goal: enough to produce (or demand) a credible, defensible valuation.

First principle: value is not price. Value comes from economic analysis; price comes from negotiation, bargaining power and context. A serious valuation produces a defensible range, not a magic number.

Key point: who can value a company? The owner can produce a first order of magnitude, but a valuation that must stand up (sale, gift, dispute) is built with a chartered accountant or an independent valuer, from restated accounts and several cross-checked methods. Cost ranges from a few hundred euros for an opinion of value to several thousand for a structured report (see the dedicated section).

You never value "in the abstract". You value for a purpose, and that context determines the basis of value. Mixing contexts produces a useless figure.

The same company can therefore be worth different amounts depending on the operation. That is not a contradiction but a market reality: a minority stake with no liquidity is not worth the same as a controlling block.

Three bases of value structure every engagement:

• open-market value (the probable price an informed buyer would pay under market conditions) - the tax authority's reference;
• value in use (what the business is worth to a specific buyer, synergies included);
• accounting fair value, used in certain restatements and combinations.

Before any method, set precise vocabulary. Disagreements often arise here, not in the maths.

Enterprise value (EV) and equity value#

Most market or cash-flow methods first give an enterprise value (EV): the value of the economic asset, regardless of how it is financed. But what is bought or sold are shares, i.e. an equity value.

The bridge is mechanical but decisive:

Equity value = EV - net financial debt + adjustments

with net financial debt = financial debt - available cash. You also adjust for normative working capital (see section 3), non-operating items (idle real estate, investments, excess cash) and liabilities (provisions, disputes, pensions). This equity bridge is the number-one source of gaps between a buyer's offer and a seller's expectation. We detail it in Sale price adjustment: net debt and normative working capital.

Premiums and discounts#

A "raw" value is adjusted to the nature of the shares sold:

• control premium: taking control is worth more than a passive stake;
• minority discount: conversely, a minority holder suffers others' decisions;
• illiquidity discount: unlisted shares cannot be resold instantly; this justifies a discount, often 10 to 30%, accepted in principle by the tax authority itself.

Never confuse pre-money valuation (before the money invested), post-money (after) and sale price: three distinct notions that files constantly blur.

No method is reliable on raw accounts. Before valuing, you restate the accounts to reveal the normative earning capacity: what the business really earns, excluding exceptional items, owner choices and financing structure. This is the most technical and most neglected step. A valuation built on an unrestated EBITDA is wrong from line one.

From reported to normative EBITDA#

Note: in France the EBE (excedent brut d'exploitation) is the equivalent of EBITDA. We detail the exercise in EBITDA vs EBE: valuation restatements.

Normative working capital and net debt#

Two figures swing a negotiation: the normative working capital (the "normal" level needed to run the business - if the company is delivered below it, the buyer must top it up and will demand a price cut) and the net financial debt at completion, deducted from EV to reach equity value.

A simple example: an SME valued at EUR 5m enterprise value, with EUR 1.2m of financial debt and EUR 0.3m of cash, is worth 5 - (1.2 - 0.3) = EUR 4.1m in equity value. If delivered working capital is EUR 0.2m below normal, the buyer will ask for EUR 3.9m.

There is no single method but three families combined with judgement. A serious valuation always crosses at least two.

4.1 Asset-based: adjusted net assets and goodwill#

The asset-based approach starts from the balance sheet. You start from net book assets (book equity) and adjust it into adjusted net assets: revalue fixed assets (real estate at market), correct inventory and doubtful receivables, factor in latent gains and deferred tax, include off-balance-sheet commitments.

Adjusted net assets = revalued assets - real liabilities - latent tax

This suits asset-heavy companies (real estate, holdings, heavy industry) but undervalues businesses whose value lies in goodwill, customers and know-how - intangibles often absent from the balance sheet. Hence goodwill: the difference between earnings value and adjusted net assets.

Goodwill (annuity method) = (earning capacity - i x adjusted net assets), discounted over n years

where i is the normal return on capital and n a short horizon (3 to 8 years). The final value is then Value = adjusted net assets + goodwill.

Example: adjusted net assets = EUR 800,000; normative earning capacity = EUR 150,000; normal return i = 6%. Annual super-profit = 150,000 - (6% x 800,000) = EUR 102,000. Discounted over 5 years, goodwill is about EUR 428,000, i.e. a total value of about EUR 1.23m.

4.2 Market multiples#

The most-used method: over 80% of SME transactions below EUR 50m rely on a multiple. Apply a multiple observed on comparable deals to a company aggregate (revenue, EBITDA, EBIT, net income).

EV = multiple x aggregate (then EV - net debt = equity value)

• revenue multiple: for young or low-margin activities, or by sector convention (goodwill);
• EBITDA multiple: the reference for a profitable SME;
• EBIT multiple: factors in depreciation (capital-intensive firms);
• net income multiple (P/E): mainly for listed companies;
• ARR / MRR multiple: for SaaS publishers, valued on recurring revenue.

The multiple is not "found online": it is built from a sample of comparables (similar size, sector, growth, margins), taking the median, adjusted for risk. In 2026 the average EBITDA multiple in France is around 5.5x, with wide dispersion (see Benchmarks). Further reading: Valuation multiples by sector: 2026 benchmarks.

Example: industrial SME, normative EBITDA EUR 600,000, sector multiple 5.5x. EV = EUR 3.3m. Net debt EUR 0.7m. Equity value = EUR 2.6m.

4.3 Discounted cash flows (DCF)#

DCF values the company by the future cash flows it can generate, discounted at a rate reflecting risk. Intellectually the most rigorous method, and the most sensitive to assumptions.

Three ingredients:

1. Projected free cash flows over an explicit horizon (often 5 years): after-tax operating profit + depreciation - capex - change in working capital.
2. Discount rate = weighted average cost of capital (WACC):

WACC = Ke x E/(E+D) + Kd x (1 - tax) x D/(E+D)

where Ke is the cost of equity (via CAPM: Ke = risk-free rate + beta x market risk premium, plus a size and illiquidity premium for an SME), Kd the cost of debt, E equity, D debt.

1. Terminal value (beyond the explicit horizon), often via Gordon-Shapiro:

Terminal value = normative flow x (1 + g) / (WACC - g)

where g is the perpetual growth rate (a prudent 1 to 2%).

EV is the sum of discounted flows + discounted terminal value; equity value follows. A DCF requires a sensitivity analysis: moving the WACC and g by +/- 1 point changes value by 20 to 40%. A DCF without a sensitivity table is an opinion in disguise.

4.4 Yield and earnings capitalisation#

For stable-earnings companies, you capitalise a normative profit or dividend: Value = normative profit / capitalisation rate. Close to the inverse of a multiple, it mainly serves as a control method.

4.5 Weight, do not average#

The classic mistake is to average the methods. The right reflex is weighting by a body of evidence: keep the most relevant method(s) for the context (asset-based for a property company, multiples + DCF for a profitable SME, funding comparables for a startup), explain the gaps, and reconcile into a range. The final value is a reasoned synthesis, not an arithmetic mean.

The section everyone looks for - and the one that needs the most caution. A benchmark is a professional (or administrative) convention expressing a goodwill value as a percentage of revenue or a multiple of EBITDA. It gives an order of magnitude, useful for a first cut or to challenge another method.

Important: a benchmark has no binding legal value. It is indicative and non-binding. Two businesses in the same sector with the same revenue can be worth twice as much one over the other depending on location, profitability, lease, owner-dependence and accounts quality. A low-profit business is valued at the bottom of the range, or below.

5.1 Professional benchmarks by sector (% of revenue and EBITDA multiple)#

The table below summarises indicative ranges observed on the French market (2025-2026 deals). Revenue percentages vary by source and basis (incl. or excl. VAT): a guide, not a calculation.

Cross-cutting adjustment rules, often forgotten: above EUR 5m EBITDA, a size premium adds 1 to 2 turns; recurring revenue adds 0.5 to 1.5x; conversely, owner-dependence removes 1 to 2 turns, and client concentration above 30% of revenue triggers a significant discount.

For goodwill detail, see our goodwill valuation benchmarks and the 2026 goodwill sale guide.

5.2 The administrative benchmark: the tax authority's method#

For gifts, inheritances and audits, the French tax authority applies its own methodology, set out in its Guide to the valuation of businesses and company shares (November 2006, still the reference). Its logic: combine several approaches rather than keep a single one - a mathematical value (close to adjusted net assets), a productivity value and a yield value, weighted by the nature of the company. The authority also accepts discounts (minority, illiquidity). Knowing this grid is essential as soon as an operation has a tax dimension.

5.3 The usufruct benchmark (dismemberment and gifts)#

To transfer or structure at lower cost, ownership is often split (usufruct / bare ownership). The tax value of each right follows the scale of article 669 of the tax code, based on the usufructuary's age (for example, between 61 and 70, usufruct = 40%, bare ownership = 60%). For a fixed-term usufruct, the value is 23% of full ownership per 10-year period. This tax scale does not always reflect the real economic value of the usufruct - a gap the authority watches. We detail these strategies in Temporary usufruct sale.

Valuing a startup with no profit yet#

Classic methods stall on a loss-making, hyper-growth startup. You switch to specific methods: funding comparables, Berkus, scorecard, VC method (exit value discounted at the investor's target IRR), or an ARR multiple for SaaS. The central topic is dilution (pre-money / post-money) and the quality of the cap table. A world of its own, covered in Startup valuation 2026 and supported by our startup valuation simulator (DCF and comparables) and dilution / cap table simulator.

Goodwill and professional practices#

A goodwill / business is valued mainly by the sector benchmark (% of revenue) cross-checked by EBITDA; see the goodwill sale guide and goodwill estimation. A professional practice raises a specific question: the value of the client base and its real transferability - covered in Selling a professional practice: valuing the client base.

Value only matters net of tax. Once the price is set, capital-gains tax determines what the seller actually receives. Here is the law applicable in 2026 - to be checked against your situation, as tax law evolves.

Capital gains on share sales (individual seller)#

Since the 2026 social security financing act, the overall social levy rate on capital income rises to 18.6% (higher CSG). A capital gain on a share sale is therefore taxed, under the flat tax, at 31.4%: 12.8% income tax + 18.6% social levies (up from 30%). The option for the progressive income-tax scale remains (with, where relevant, holding-period allowances on pre-2018 shares). Note: life-insurance is excluded from the increase and stays at 17.2%.

Regimes that can wipe out the tax#

• Article 151 septies (sole trader, income tax): exemption based on revenue, assessed on the average of the two prior years, after at least 5 years of activity. Sales / catering / accommodation: full exemption up to EUR 250,000, tapering from 250,000 to 350,000. Services / non-commercial income: full up to EUR 90,000, ending at 126,000.
• Article 238 quindecies (transfer of a business or full branch): full exemption if the value of the assets sold is EUR 500,000 or less, tapering up to EUR 1,000,000 (excluding real estate).
• Article 150-0 D ter (SME director retiring): fixed EUR 500,000 allowance on the gain, extended to 31 December 2031. Conditions: EU-sense SME (under 250 staff, revenue < EUR 50m or balance sheet < EUR 43m), shares held at least 1 year, ceasing functions and retiring within 24 months, eligible activity for 5 years. The allowance reduces income tax but not social levies, due on the whole gain.

Defer rather than pay: contribution-then-sale#

The contribution-then-sale (article 150-0 B ter) lets you defer taxation by contributing your shares to a holding you control before the sale. If the holding sells within 3 years, the deferral is kept provided at least 60% of the proceeds are reinvested in an eligible economic activity. Powerful but technical, detailed in Contribution-sale (150-0 B ter), to be articulated with the holding vs property company choice.

Gratuitous transfer: the Dutreil Pact#

For a gift or inheritance, the Dutreil Pact (article 787 B) gives a 75% allowance on the value of the shares transferred, under collective and individual holding undertakings and a management role. The central tool of family transfer: see the full Dutreil guide and the Dutreil simulator.

Transfer duties and seller's credit#

On the buyer's side, the sale bears transfer duties: goodwill (progressive scale: 0% up to EUR 23,000, 3% from 23,000 to 200,000, 5% above), private-limited-company shares (3% after allowance), simplified-joint-stock shares (0.1%). The asset vs share choice therefore has a major tax impact on both sides. Finally, a seller's credit (deferred payment) entitles small businesses (under 50 staff, balance sheet or revenue <= EUR 10m) to spread the capital-gains tax (article 1681 F): see seller's credit. The choice between a share sale and an asset sale, and the optimisation of capital-gains exemptions, are prepared well in advance.

As soon as you want to bring managers or employees into the capital (equity warrants, free shares, management package), the valuation becomes the reference point: it sets the exercise price, measures dilution and underpins the tax consistency of the scheme. An exercise price disconnected from real value invites a reassessment. The topic has its own logic, covered in BSPCE 2026: valuation and tax. The essential: you do not distribute capital without a clean, documented valuation consistent with the one used with investors.

This is what separates a back-of-the-envelope figure from a valuation that stands up. Whether you run it or commission it, an engagement follows a precise framework, which can be summed up in eight steps.

1. Define the objective and basis of value in an engagement letter (sale, gift, dispute, contribution; open-market, value-in-use or fair value; scope of shares or assets, majority or minority).
2. Gather and validate the data: three years of accounts, an interim position, a forecast, working-capital and debt detail, leases, key contracts, litigation, cap table.
3. Restate the accounts to derive a normative EBITDA (owner pay, rents, non-recurring items, finance leases, provisions).
4. Apply several methods (asset-based, multiples, DCF) and justify each.
5. Bridge from enterprise value to equity value (net debt, normative working capital, non-operating items).
6. Apply premiums and discounts (control, minority, illiquidity).
7. Weight and reconcile into a defensible range.
8. Write the valuation report and factor in exit tax to reason in net value.

Engagement letter and scope#

It all starts with an engagement letter setting the objective, the basis of value, the scope, the data provided, the limitations and the fees. Without a clear objective, the valuation is meaningless.

Standards, ethics and independence#

The valuer relies on professional frameworks: chartered-accountant recommendations, financial-expert bodies, and the International Valuation Standards (IVS). They carry liability and must be independent. For a contribution or merger, a contributions auditor checks the value.

Diligence and required data#

A serious engagement gathers: three years of accounts, an interim position, a forecast, working-capital and debt detail, key leases and contracts, litigation status, the cap table, the org chart, dependencies (clients, suppliers, key person). Quality depends directly on data quality - hence the importance of a properly analysed balance sheet upstream.

The valuation report#

The deliverable is a structured report: context and objective, company and market, restatements, methods applied and justified, weighting and reconciliation, value range, limitations and reserves. A good report is explainable to a third party - which makes it defensible before a buyer, a judge or the tax authority.

How much does a valuation cost?#

Cost depends on size, complexity and purpose. As an indication (fees are free and set in the engagement letter): a quick opinion of value runs from a few hundred to a few thousand euros; a structured SME report is generally several thousand (around EUR 3,000 to 15,000 depending on the firm); complex engagements (group, dispute) cost more. A chartered accountant's hourly rate is EUR 50 to 150, more for the signing partner. A well-built report beats a poorly negotiated deal on a fragile valuation.

1. Confusing value and price: value is argued, price is negotiated.
2. Starting from unrestated EBITDA: without normalising owner pay and exceptional items, everything else is wrong.
3. Forgetting normative working capital and net debt in the EV -> equity bridge.
4. Using a multiple "found online" with no coherent comparables sample.
5. Over-weighting the asset-based method for an intangible-value business.
6. A DCF with no sensitivity analysis: a fanciful WACC or g produces any result.
7. Ignoring illiquidity and minority discounts on unlisted shares.
8. Neglecting latent and exit tax: net value matters, not gross.
9. Taking a benchmark literally as if it were a guaranteed price.
10. Announcing a value with no clean cap table or documentation: an indefensible valuation is worthless in negotiation.

In practice, the best-valued companies are not those with the cleverest method but those that prepared. Readable profitability, restated accounts, reduced owner-dependence, a diversified client base, controlled working capital and solid documentation are often worth several multiple turns - far more than a technical debate over the discount rate.

Valuation is therefore as much a steering tool as a transaction exercise: valuing your company regularly identifies the levers that create (or destroy) value, and lets you act three years before a sale rather than three months. That is exactly the logic of our growth strategy and valuation and outsourced CFO engagements.

Preparing a sale, a transfer, a fundraise or a partner entry? Contact Hayot Expertise for a tailored valuation, or take stock with our business valuation in Paris service.