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. Three words should be told apart: valuation is the process of analysis, value is its result, and price is the amount the parties agree on through negotiation.

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 a frequent 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. The DGFiP guide states that this discount is required in two cases, where value is derived from revalued net assets alone and where it is built on stock-market data. It publishes no general percentage, and notes that no discount is justified where the combination of methods already produces the real value.

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, generally 5 to 8 years depending on how durable the super-profit is (DGFiP guide, 2026 edition). 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 at the 6% rate used above, the coefficient (1 - (1 + i)^-n) / i is 4.21, so goodwill is about EUR 430,000, i.e. a total value of about EUR 1.23m. Watch the rate: at 8% the coefficient would fall to 3.99 and goodwill to about EUR 407,000.

4.2 Market multiples#

This is the method most commonly used on the SME market. 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. There is no national average multiple that could serve as a reference: dispersion between sectors, and within a sector by size and revenue recurrence, is too wide for an average to mean anything (see Benchmarks). Further reading: Valuation multiples by sector: 2026 benchmarks.

Example: industrial SME, normative EBITDA EUR 600,000, assumed 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, which reflects long-term inflation and should not be significantly higher than long-term nominal GDP growth (DGFiP guide, p. 19).

EV is the sum of discounted flows + discounted terminal value; equity value follows. A DCF requires a sensitivity analysis: the worked example in section 4.6 includes a table showing how a change in the WACC and g moves the value. 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.

4.6 Full worked example: from restated EBITDA to equity value#

Fictitious company: all figures are illustrative assumptions, neither market references nor recommended rates.

Step 1: restate EBITDA. Four restatements take reported EBITDA (EBE) of EUR 520,000 to a normative EBITDA of EUR 560,000:

Step 2: multiples. With an assumed multiple of 5x: EV = 5 x 560,000 = EUR 2.80m.

Step 3: DCF. Projected free cash flows over five years (EUR 270,000, 280,000, 290,000, 300,000 and 310,000), discounted at a 12% WACC, are worth about EUR 1.04m. The Gordon-Shapiro terminal value, with g = 1.5%, is 310,000 x 1.015 / (12% - 1.5%), i.e. about EUR 3.00m, and EUR 1.70m once discounted. DCF enterprise value comes to about EUR 2.74m, 62% of which comes from the terminal value.

Step 4: weight and bridge to equity value. Equal weighting, assumed here because both methods are considered equally relevant; in a real file, the weighting is justified from the diagnostic review (DGFiP guide, p. 49). The amount obtained is a central value: in a negotiation it comes with a range, which the sensitivity table below helps build; in a tax context it serves as the single value.

Sensitivity of the DCF enterprise value (EUR m; WACC ±1 point, g ±0.5 point):

The change in DCF enterprise value therefore ranges from about -11% to +15%, because the terminal value carries most of the result. To test your own assumptions: SME valuation simulator.

Benchmarks call for a cautious reading. 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: size and recurring revenue pull the multiple up; conversely, owner-dependence or high client concentration pull it down. These adjustments are assessed case by case, without counting the same risk twice (DGFiP guide, p. 54-55).

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

5.2 The tax authority's method, and why there is no administrative benchmark#

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 (2026 edition, published in June 2026). The authority publishes no benchmark: for retail goodwill, its guide points either to comparison after a market study, or to the professional conventions listed in indicative benchmarks, noting that in the absence of a market those benchmarks are sometimes the only usable reference. Its own logic is to combine several approaches rather than keep a single one: a mathematical value (VM), close to adjusted net assets, and a profitability value (VRent), which is either a single value obtained by capitalising a normative result, by multiples, by DCF or by yield value, or a simple or weighted average of several of these. The two are weighted, in a table the guide presents as indicative and non-binding, differing according to whether the shareholding is a majority or a minority one. One counter-intuitive point is worth knowing: the authority applies in principle neither a control premium nor a minority discount, precisely because those differentiated weightings, in its words, make it possible to set aside their use. Knowing this grid is essential as soon as an operation has a tax dimension.

What the 2026 edition of the DGFiP guide says

In the June 2026 edition, the preamble sets two requirements: a prior, in-depth and individual analysis of the business, and a two-way exchange (échange contradictoire). The guide provides no formulas to be applied mechanically and cites the valuation ruling procedure (rescrit valeur) among the safeguards offered to taxpayers (p. 3). Points that matter for a file:

• single value: in a tax context, duties cannot be computed on a range of values (p. 49);
• no control premium and no minority discount, in principle, for the reason given above (p. 52);
• illiquidity: the discount is required in two cases, valuation from revalued net assets alone and valuation based on stock-market data (p. 53-54);
• key person: a 10% discount on the facts of the case (Bordeaux administrative court of appeal, 22 November 2016, no. 14BX03320), not to be combined with a size premium that already includes this risk (p. 55);
• approval clause: a 10% discount applied by the Cour de cassation (1 April 1997), which weighs the clause's advantages as well as its drawbacks (p. 55).

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: the 18.6% rate applies in particular to dividends and gains on securities; life insurance, rental income and real-estate gains stay at 17.2%.

Regimes that can wipe out the tax#

These regimes do not all cover the same operation: 151 septies and 238 quindecies apply to the sale of a sole proprietorship, a business branch or interests in a partnership subject to income tax, not to the sale of shares in a company subject to corporate tax, which falls under 150-0 D ter when the seller retires.

• 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 for the seller: having held a management position continuously for the 5 years before the sale, having held, continuously for the 5 years before the sale, at least 25% of the voting rights or of the rights to profits, having held the shares for at least 1 year, and ceasing all functions and claiming retirement rights within the 2 years before or after the sale. Conditions for the company: an SME in the EU sense (fewer than 250 people, revenue not exceeding EUR 50m or balance-sheet total not exceeding EUR 43m), subject to corporate tax and carrying on an operating activity (commercial, industrial, craft, professional, agricultural or financial). Conditions for the sale: it covers all the shares held by the seller in the company or more than 50% of the voting rights and, where the buyer is a business, the seller holds no voting rights or rights to profits in the buyer. 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 three years, the deferral is kept provided at least 70% of the proceeds are reinvested within three years in an eligible economic activity, and the reinvested assets are held for at least five years. The 70% threshold and the five-year holding period apply to sales carried out from 21 February 2026 (article 11 of law 2026-103 of 19 February 2026); the earlier rule was 60% within two years. 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. The overall seller-side structuring (assets or shares, commitment calendar, 2026 relief regimes) is covered on our business transfer accountant page.

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%) and, by exception, 5% for shares in companies whose assets are predominantly real estate (article 726 of the tax code). 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 not exceeding EUR 10m) to spread the payment of the 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) where the methods do not already capture them.
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 in kind, a contribution auditor assesses the value in principle (a unanimous waiver is possible, subject to value thresholds, when a SARL or SAS is incorporated). At Hayot Expertise, these engagements are led by Samuel Hayot, chartered accountant registered with the Paris Île-de-France institute of chartered accountants and statutory auditor entered on the official roll of statutory auditors: the dual registration covers both contractual valuation reports and regulated contribution-audit engagements.

Where the law refers to article 1843-4 of the Civil Code, or where the articles of association provide for a transfer or buy-back of shares without a determinable price, a disputed value is set by an expert appointed by the parties or, failing agreement, by the president of the civil or commercial court, ruling under the expedited procedure on the merits with no appeal. This expert does not act as a judicial expert (expert judiciaire): they apply the valuation rules of the articles of association or of any agreement between the parties. In a merger, a court-appointed merger auditor checks that the exchange ratio is fair (article L. 236-10 of the Commercial Code), unless the shareholders of all the companies involved unanimously waive it.

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 freely agreed and set out 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; complex engagements (group, dispute) cost more. The firm's fees are published on its business valuation service page. A well-built report beats a poorly negotiated deal on a fragile valuation. The lighter format is detailed in our article on the value opinion; for an immediate first estimate, our SME valuation simulator gives a range in two minutes.

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. Applying or dismissing a discount without justification: a minority or illiquidity discount is only retained where the methods do not already capture it, otherwise the same risk is counted twice (DGFiP guide, p. 52-54).
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 often weigh more on value 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 business valuation by a chartered accountant and outsourced CFO engagements.

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

Before putting the company on the market, the approach condenses into six steps, in this order:

1. Gather the last three years of accounts, the tax package and a realistic forecast.
2. Restate EBITDA: manager pay at market rate, exceptional items, non-operating charges.
3. Apply at least two methods (asset-based + earnings, or earnings + DCF) and compare the results.
4. Move from enterprise value to equity price: net debt, excess cash, normative working capital.
5. Apply discounts or premiums (control, minority, illiquidity) depending on the block sold, where the methods do not already capture them.
6. Build a reasoned range and document every assumption for the negotiation and the tax authority.

On restatements, the most frequent traps: manager pay not normalised, exceptional income left in EBITDA, rent and personal expenses not reinstated, obsolete inventory and doubtful receivables not written down, working capital taken at closing date instead of its normative level, restatements inconsistent from one year to the next.

One last point of vigilance: the understated price. The tax authority compares the declared price with open-market value (DGFiP valuation guide, audits based on article L. 17 of the French Tax Procedures Book); a manifestly insufficient price can be reassessed, especially in intra-family sales or sales to a holding company. The seller's protection lies in the quality of the file: multiple methods, justified restatements, traceable assumptions. The projects that raise value before a sale are detailed in making your company sellable.