Company valuation for SMEs · calculations you can follow
Understand the value. Prepare your business for transfer.
I show what supports your business earnings, which risks affect value and which opportunities matter to a buyer. You receive a reasoned valuation and the calculations behind your next decision.
A single method rarely explains the whole business. I select the approach for your question and cross-check the results.
Multiples
Earnings × a comparable factor. Useful for an initial view. Comparability, the earnings basis and factor need examination.
DCF
Convert future free cash flows into today’s value. Shows what remains after tax, investment and additional working capital.
Earnings value / AWH
Assess sustainable earnings systematically. The German AWH method may suit crafts businesses; this is not a simulated AWH valuation report.
Asset value
Assess assets and obligations. A complementary view that does not fully capture customer relationships or future earnings.
The worked example uses multiples and DCF. Every factor, discount rate and tax assumption is invented. They are not current market benchmarks.
02 · Fictional case
A crafts business is preparing for a new owner.
The fictional Weserwerk Montage GmbH has 22 employees and €2.8 million annual revenue. Its owner is preparing for a transfer. We value 100% of the shares in this German limited company as at 31 December 2026, assuming continued operation.
Starting point
Reported EBITDA
Earnings before interest, tax, depreciation and amortisation
€240,000
Before checking unusual items and necessary future costs.
Illustrative assumption
Example factor 4.5
€240,000 × 4.5
€1,080,000
Initial operating business value before debt, cash and working capital adjustment.
My assessment
What supports these earnings?
One-offs + owner costs + future needs
Step by step
We examine the earnings before multiplying them by a factor.
The company, records and every result are fictional. “Operating business value” means enterprise value here; the value of the shares follows later.
03
€240,000 becomes €315,000 of assumed sustainable earnings.
Normalisation increases value only when the adjustment is supported. Costs that continue after the transfer stay in the calculation.
Reported EBITDA2026 earnings from the fictional accounts.
€240,000
Running total€240,000
One-off relocationDocumented exceptional costs; no repeat planned.
+ €35,000
Running total€275,000
Allow for replacement management€150,000 current total cost less €105,000 replacement cost.
+ €45,000
Running total€320,000
Adjust fleet costs€10,000 disappears; €3,000 remains necessary for the business.
+ €7,000
Running total€327,000
Add ongoing maintenanceDeferred maintenance needs €12,000 annually in future.
− €12,000
Running total€315,000
Normalised EBITDASustainable starting point under these assumptions.
€315,000
Running total€315,000
Every adjustment needs evidence.
I examine relocation invoices and recurrence risk, replacement management duties and pay, business use of vehicles and maintenance requirements. Any one-off maintenance backlog would need a separate assessment; this example includes ongoing maintenance only.
Higher earnings are not automatic.
Removing all owner-manager pay would be wrong: someone must run the business. Necessary vehicles also remain. This makes the higher figure explainable.
1 · Earnings normalisation across three financial years
Actual extract from the calculated example workbook. Prior years provide context; the relocation affects 2026 only.
Unadjusted
Simple multiple
€240,000 × 4.5
€1,080,000
Operating business value before debt and cash.
Normalised
The same factor
€315,000 × 4.5
€1,417,500
The earnings basis changes; the factor stays the same.
Difference
Better supported earnings
€75,000 × 4.5
€337,500
Calculated difference, not a promised additional sale receipt.
04 · Preparing the DCF
Earnings are not yet free cash flow.
For 2027 we start with normalised EBITDA, then allow for tax, necessary investment and additional cash tied up in operations. “Free cash flow” here is cash generated by the business before payments to lenders and owners.
Normalised EBITDAStarting point for 2027.
€315,000
Running total€315,000
DepreciationAccounting charge on assets, not a new cash payment.
− €55,000
Running total€260,000
Assumed income tax30% of €260,000 EBIT.
− €78,000
Running total€182,000
Add depreciation backReverse the non-cash charge to calculate cash flow.
+ €55,000
Running total€237,000
Necessary capital expenditureActual payments for maintenance and planned development.
− €65,000
Running total€172,000
Additional working capitalMore cash in inventory and receivables, net of trade payables.
− €12,000
Running total€160,000
Free cash flow 2027Before financing, after simplified income tax.
€160,000
Running total€160,000
The €12,000 ongoing maintenance is already in normalised EBITDA. The €65,000 capital expenditure is additional capitalised spending, deducted separately. The same expense is not counted twice. Tax payments are assumed to fall in the same year.
2 · Five-year plan: earnings to free cash flow
Baseline without buyer benefits, assuming customer retention. All workbook lines are connected by formulas.View all calculations for the five baseline years as a table
Scroll sideways for more columns →
Calculation
2027
2028
2029
2030
2031
Revenue
€2,800,000
€2,884,000
€2,971,000
€3,060,000
€3,152,000
EBITDA
€315,000
€327,000
€341,000
€353,000
€365,000
Depreciation
-€55,000
-€56,000
-€57,000
-€59,000
-€60,000
EBIT
€260,000
€271,000
€284,000
€294,000
€305,000
Income tax
-€78,000
-€81,300
-€85,200
-€88,200
-€91,500
Add depreciation back
€55,000
€56,000
€57,000
€59,000
€60,000
Capital expenditure
-€65,000
-€66,000
-€68,000
-€69,000
-€70,000
Additional working capital
-€12,000
-€12,000
-€12,000
-€12,000
-€12,000
Free cash flow
€160,000
€167,700
€175,800
€183,800
€191,500
Revenue increases from €2.8 million to €3.152 million and EBITDA from €315,000 to €365,000. Depreciation, investment and additional working capital are planned separately. Existing debt enters the equity bridge later; interest and principal are not also deducted from these free cash flows.
05
Bring future cash flows to a common valuation date.
At the assumed required return, a future euro is worth less than a euro today. DCF therefore discounts each planned cash flow to 31 December 2026. We assume a 14% annual discount rate and year-end cash flows.
Later cash flows discounted to the same valuation date.
Step 3
Operating business value
€596,334 + €807,608
€1,403,942
Enterprise value before debt, cash and working capital adjustment.
For continuation, final-year free cash flow is assumed to grow by 1.5% annually forever, including the investment and working capital needed to support it. This requires examination in a real project. About 58% of baseline value comes from continuation, making that assumption particularly important. Individual figures are rounded to whole euros.
How sensitive is value to discount rate and growth?
Scroll sideways for more columns →
Discount rate
0.5% growth
1.5% growth
2.5% growth
12 %
€1,576,762
€1,677,550
€1,799,556
14 %
€1,336,752
€1,403,942
€1,482,817
16 %
€1,159,045
€1,206,103
€1,260,133
Operating business value with the baseline cash flows unchanged. This shows the effect of invented assumptions, not an assessed market price range. The discount rate must exceed long-term growth.
06
What if customers are loyal mainly to the outgoing owner?
Some established customers could leave after a transfer. This is a risk scenario assumption, not a finding about the fictional business.
Customer retention
Revenue affected
€300,000 × 50%
€150,000
Annual revenue loss from 2027 onwards.
Earnings effect
Lost contribution
€150,000 × 20%
€30,000
Annual EBITDA reduction; variable cost savings are already allowed for.
After tax
Lower free cash flow
€30,000 × (1 − 30%)
€21,000
Investment and working capital remain unchanged.
Baseline DCF business value€1,403,942
Customers stay; 14% discount rate.
DCF with customer loss€1,243,284
The loss also persists into the continuation period.
Value difference€160,657
Shows why customer retention matters to valuation.
I examine customer concentration, contracts, contact people, repeat orders and transition plans. Retention measures may change the scenario but can also bring costs. This risk is modelled directly in cash flow; the same effect is not also penalised through a higher discount rate.
07
A buyer may have additional opportunities.
A strategic buyer may combine purchasing and administration. Benefits count only if additional to normalised earnings and after implementation costs.
Scroll sideways for more columns →
Effect
Annual assumption
Assessment
Purchasing improvements
+ €25,000
Additional; supported by terms and volumes.
Shared administration
+ €20,000
Additional; necessary duties still covered.
Extra coordination
− €10,000
Additional work between the businesses.
Recurring net benefit
€35,000
Before tax; only 50% realised in year one.
One-off integration
− €40,000 in year one
Assumed immediately deductible expense, including its tax effect.
2027
Ramp-up and integration
(€35,000 × 50% − €40,000) × 70%
-€15,750
Integration costs exceed benefits in year one.
From 2028
Recurring benefit
€35,000 × 70%
€24,500
Additional annual free cash flow.
Discounted additional value
Buyer opportunity
Five years + continuation, discounted at 14%
€152,127
Value to this hypothetical buyer, not guaranteed seller proceeds.
Replacement management and necessary vehicles remain included. Earlier normalisation adjustments are not counted again as synergies. Additional capital spending or integration disadvantages would also enter the calculation. The buyer and its operating plan must support the continuing benefits.
08
What is the business worth, and what are its shares worth?
DCF values operations before financing. To value 100% of the shares, we account for existing financial debt, eligible cash and agreed working capital. We start with the baseline without buyer benefits.
DCF operating business valueBaseline at a 14% discount rate.
€1,403,942
Running total€1,403,942
Financial debtFictional outstanding loans at the valuation date.
− €360,000
Running total€1,043,942
Eligible cashFully attributable in this example; no additional minimum operating cash.
+ €80,000
Running total€1,123,942
Working capital shortfall€220,000 actual less €250,000 agreed normal working capital.
− €30,000
Running total€1,093,942
Value of 100% of the sharesBefore personal taxes, transaction costs and further contractual adjustments.
€1,093,942
Running total€1,093,942
What does working capital mean in this example?
This means operating inventory and receivables less trade payables, excluding cash and financial loans. The business is to transfer with an agreed normal level. A €30,000 shortfall is deducted from equity value under the assumed pricing mechanism.
The planned annual €12,000 increase concerns future operations. The one-off €30,000 shortfall concerns the transfer date and is not also deducted as a first-year cash outflow. Definitions, the date and settlement mechanism require agreement in a real transaction.
3 · DCF to equity value in the example workbook
The extract separates explicit forecast value, continuation, financial debt, cash and working capital adjustment.
09
Three calculations on the same basis.
Here we always compare the value of 100% of the shares, with identical debt, cash and working capital adjustments. This makes the results comparable.
Simple multiple€770,000
€240,000 × 4.5 − €310,000 adjustments.
Normalised multiple€1,107,500
€315,000 × 4.5 − €310,000 adjustments.
DCF · baseline€1,093,942
Forecast including investment, tax and working capital.
The value lies in the explanation.
In this example, supported adjustments justify a higher value than the simple multiple. DCF sits slightly below the normalised multiple. That is useful: it reveals the investment and assumptions behind the figure. Customer risks can reduce value again; buyer benefits can create additional room for negotiation.
10 · Explore the scenarios
Which assumption changes value?
Four cases and three discount rates provide twelve calculated combinations. Customer loss and buyer benefits can be selected separately or together. Earlier worked calculations and workbook extracts remain the baseline at 14%.
Operating business value€1,403,942before financial debt and cash
Equity value€1,093,942100% · after date-specific adjustments
Additional buyer value€0after costs and tax, discounted
Free cash flow 2027€160,000before interest and principal
Baseline: customers stay · 14 % discount rate. Planned customer relationships are retained. No buyer-specific benefits are included.
Compare equity values · same discount rate
All four cases: 100% of the shares, with the same −€310,000 adjustment. Dark blue marks your selection.
Baseline: customers stay
€1,093,942
Customer loss
€933,284
Buyer benefits
€1,246,069
Buyer benefits + customer loss
€1,085,411
Baseline: customers stay · 14 %
View the selected five-year calculation
Scroll sideways for more columns →
Year
EBITDA
Free cash flow
Discount factor
Value at valuation date
2027
€315,000
€160,000
0.877
€140,351
2028
€327,000
€167,700
0.769
€129,040
2029
€341,000
€175,800
0.675
€118,660
2030
€353,000
€183,800
0.592
€108,824
2031
€365,000
€191,500
0.519
€99,459
Separate additional value from sale price.
Without buyer-specific benefits there is no separate synergy premium. Equity value remains a basis for negotiation.
Buyer cases show a buyer-specific value perspective. They do not automatically increase standalone value. Long-term growth stays at 1.5% here.
11
You receive a working basis for your decision.
I document earnings adjustments, the forecast, appropriate valuation approaches and the main value drivers. Where included in the scope, you receive a system or file you can update yourself.
Five worksheets with formulas. Change case 0–3 and discount rate on the Inputs sheet. Every figure is fictional. This is a demonstration, not a template for an unchecked transaction.
Project · Finance Decision System
Company valuation
from €4,000 excluding VAT
A clearly scoped valuation can be delivered within the Finance Decision System. Scope, evidence, purpose and required output determine the proposal.
This detailed example illustrates the breadth of expertise. Multiple buyer models, extensive data preparation or additional scenarios may require a broader scope and higher fee. Both are agreed before commissioning.
Ongoing support
Business succession
Individually agreed
If valuation is followed by an actual transfer, I support preparation, commercial discussions and comparison of offers. The monthly retainer and completion fee are agreed separately.
I am Roman Braun, founder of Deistermind. I examine the financial evidence, build the appropriate calculations and discuss what they mean for your decision. Unresolved assumptions remain visible.
01 · free
Initial conversation
Clarify your objective, position and available records.
02 · before commissioning
Scope and fees
Agree deliverables, timing and price.
03 · working together
Analysis and model
Examine assumptions and calculate relevant alternatives.
04 · handover
Decision basis
Discuss the results and continue using the model.
I provide financial analysis and modelling. Tax, legal and formally required assessments belong with the appropriate specialists.
12
Questions to clarify before a valuation
Is the calculated value an achievable sale price?
It provides an explainable basis for decisions and negotiations. Price also depends on the buyer, financing, contract terms and verified assumptions. A higher sale price is not promised.
What format will my assessment come in?
You receive the agreed analysis and, where included in the scope, an editable system or file. The format depends on your records and how you work. This demonstration uses .xlsx.
Is this a tax or court valuation report?
The service described supports commercial decisions and negotiations. It does not promise a specific valuation standard or a tax, court or other formally prescribed report. We agree the intended purpose and requirements first.
Which records are useful initially?
Depending on your question: annual accounts, current management accounts, plans, loans, customer mix and relevant contracts. We establish the actual requirements in the free initial conversation.
Sale, acquisition, transfer or an initial assessment: the free conversation establishes your question and the appropriate scope. You then receive a specific proposal.
