Dos and Don’ts in the valuation of SMEs

Mistakes in business valuation and how to avoid them

Business valuations are increasingly subject to critical scrutiny, by professional colleagues, lawyers and the courts. A business valuation is not repeatable. Once an expert opinion has been prepared, it cannot be “retrieved”, so it is important to avoid mistakes. This article provides tips on how to do this.

Introduction

Business valuation is actually impossible, because the businessman only pays for the future – and that is uncertain. Like forecasts, company valuations can also be wrong. The Federal Supreme Court (BGer) recently ruled that disappointed value expectations in a company purchase can constitute a fundamental error. In the case decided, errors in the valuation prepared by the buyer’s advisor (“deficiencies regarding generally accepted valuation methods”) were alleged, among other things. The resulting liability risks for valuers are obvious.

The article deals with common mistakes in the valuation of SMEs and gives advice on how to avoid them.

Read the full article from EXPERT FOCUS 2017|4 (in German) here.