The Federal Supreme Court on valuation with multipliers: Too much of a good thing?

While case law deals extensively with practitioner methods, rulings on the DCF method are rare and there are no rulings on multiples (at least from us). All the more exciting is the case decided by the Federal Supreme Court on 18.02.2025 (9C_485/2024), which dealt with the tax valuation of investments using an EBITDA multiplier. The ruling is not extensive, but it is substantial.

Poverty also exists in Monaco

The case as such is straightforward: In 2018, a Swiss-based trust company acquired 80% of a Monegasque company for a purchase price of around CHF 3.4 million. The (undisputedly market-compliant) purchase price was determined on the basis of an EBITDA multiple of 5.

One year later, the investment was written off in full, partly due to a lack of profitability and apparently also requested by the auditors. According to the information provided, the company was overindebted in 2019 and had no significant hidden reserves.

Read the full blog post here.