Recognition of valuation reports from abroad?

We received the following question regarding our article “SME Valuation in the DACH Region“: In the case of a legally required valuation (in this case inheritance law), is an expert opinion prepared according to foreign valuation standards (in this case the German IDW S1) to be recognised for the valuation of a Swiss company in Switzerland?

First of all

There is no legal regulation on this. Therefore, the purpose of the valuation determines the valuation method. This does not exclude foreign valuation standards and methods for the time being. The Federal Supreme Court is known to advocate a pluralism of methods, which, however, probably refers to the range of forms customary in Switzerland. This means that the fact that an expert opinion complies with the German IDW S1 or the Austrian KFS/BW1 does not exclude its use for this reason alone, but it also does not prove its correctness and appropriateness for the specific case. Rather, it must be examined whether the method used also corresponds to Swiss valuation theory and practice.

Special features IDW S1

Here, only some peculiarities of the German valuation standard IDW S1 – in comparison to the Swiss technical communication on business valuation – should be pointed out:

• IDW S1 excludes a valuation exclusively with multiples.
• According to IDW S 1, personal taxes must always be taken into account, exceptions are permissible.
• So-called “size premia” are categorically rejected by IDW S1 – as are surcharges and discounts of other kinds.

What does this mean now?

A valuation report prepared in accordance with foreign standards is to be recognised if the valuation corresponds materially to Swiss valuation theory and practice. The current EXPERTsuisse business valuation bulletin can be used as a benchmark. Further information on similarities and differences in business valuations in the DACH region can also be found in the above-mentioned article.