How to value a business or shareholding: key criteria to set a fair price in acquisitions, non-cash contributions and corporate restructurings

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🏁 Valuing a business is never just about a number

Determining what a business is truly worth is not an accounting task. It is a process shaped by opposing interests, expectations, risks, emotions and, above all, information asymmetries. The seller naturally aims to maximise the price; the buyer aims to minimise it. Both usually believe they have legitimate arguments to defend their position.

However, the real value of a business does not emerge from this tension. It comes from a technical analysis that turns scattered data into useful information. A professional valuation does not deliver a magic number: it defines a reasonable range, a reference point that guides negotiations, avoids costly mistakes and supports informed decision-making.

In acquisitions, non-cash contributions or corporate restructurings, the role of an advisor is essential: introducing objectivity where there are usually only perceptions and intuitions.

➤ For additional context on business structures, we recommend the article Key aspects before incorporating a company

💡 Valuing a company is not about finding a number, but defining a reasonable valuation range

In practice, a company does not have a single value. It has a valuation range based on objective methodologies, prudence and risk. The final price is negotiated within this range and depends on factors such as:

• business stability,
• quality and depth of the team,
• dependence on the founder,
• sector-specific risks,
• genuine growth capacity.

The seller tends to overestimate the company’s strength.
The buyer tends to emphasise potential risks.

A professional valuer acts as a moderator: translating the economic reality into a defensible range, reducing tensions and helping both parties avoid decisions based solely on intuition.

📊 Valuation methods: from adjusted net asset value to the value of a going concern

Professional valuations combine several methodologies. None is perfect; each provides a different piece of the puzzle.

📌 Adjusted net asset value

Useful especially when:

• there are significant fixed assets,
• the business is close to liquidation,
• operations are more dependent on assets than on ongoing activity.

But insufficient when value lies in the activity, the team or the reputation.

📌 Multiples valuation (EBITDA)

Widely used in fast transactions:

• a normalised EBITDA is determined,
• a sector- and risk-adjusted multiple is applied.

Advantage: simplicity.
Risk: inflated expectations if structural factors are ignored.

📌 Discounted cash flow (DCF)

The most comprehensive method for stable businesses:

• projects future cash flows,
• incorporates risk adjustments,
• discounts at a coherent market rate.

It allows assessment of sustainability, operational dependencies and long-term resilience, though it requires great prudence and technical experience.

📌 Goodwill or business reputation

Includes intangibles such as:

• reputation,
• customer portfolio,
• know-how,
• team stability and continuity.

In reorganisations and contributions, goodwill may represent a substantial share of real value.

In practice, the final value emerges from a balanced combination of multiple methods.

And crucially: accounting must always reflect the underlying reality. If accounting is distorted, incomplete or poorly maintained, valuation results will inevitably diverge. This challenge is particularly relevant in jurisdictions where the accounting profession is not formally regulated.

In this context, it is useful to consult the article The accounting expert in Andorra: legal framework, real functions and how to choose a reliable professional, as it explains why sound accounting is essential for any valuation.

Likewise, the articles Accounting in Andorra: origin and structure of the PGC and Accounting depreciation in Andorra: criteria and application broaden the technical perspective and help understand the foundations on which valuations rely.

🌍 International context: how Spain, France and Belgium approach business valuation

Valuation methodologies share the same essence across Europe, but each country applies its own nuances.

📌 Spanish and Andorran approach (closer to the international and american)

Very close to the international and American standard:

• adjusted net asset value,
• EBITDA multiples,
• DCF,
• analysis of founder dependence and internal team structure.

In founder-dependent businesses, their potential withdrawal can drastically reduce value.

📌 French and Belgian approach

Traditionally more conservative:

• fiscal décote on certain assets,
• goodwill based on super-profits,
• mixed asset–income methods,
• evaluation focused on return in proportion to the risk assumed.

📌 Comparative conclusion

Across systems:

• valuation is never a fixed figure,
• it is a range conditioned by risk,
• it requires neutrality, prudence and technical rigour.

If a company operates across several jurisdictions, additional elements must be integrated: territorial accounting criteria, local contingencies, expected regulatory changes and differences in legal frameworks.

🧾 Due diligence: where the real price — not only the theoretical one — is defined

Valuation is theoretical.
Due diligence is factual.

It verifies whether what appears in the accounts truly reflects the business reality and its market position.

Typically, due diligence analyses:

• financial statements,
• key contracts,
• litigation and contingencies,
• tax risks,
• personnel structure and seniority,
• critical dependencies,
• licences and permits,
• remuneration of directors, founders and partners.

On this point, the article How to remunerate partners and directors legally and efficiently provides useful context.

A due diligence process may:

• reduce the price by 10% to 40%,
• or justify a higher price if synergies or non-recognised intangibles exist (e.g., a brand created internally and not registered as an asset).

➤ For more on this topic: Due diligence: what it is and how it affects the purchase price.

🔄 Contributions of shares and corporate restructurings: when valuation becomes indispensable

Valuation is crucial in:

• non-cash contributions,
• creation of holding companies,
• internal reorganisations,
• mergers and demergers,
• transfers between partners or family members.

In such operations:

• the objective is not to negotiate a price but to ensure fairness,
• maximum prudence is essential,
• both corporate and tax principles must be strictly respected.

In Andorra, these operations fall under Law 17/2017 on corporate reorganisations, which sets a clear and rigorous framework.

Practically all such operations involve holding companies, which are the entities receiving the shares or equity interests during contributions or restructurings. For this reason, the article Holding companies in Andorra is essential to understand their purpose and internal mechanics.

➤ For a structured overview of the steps involved in their creation, see Incorporating a company in Andorra.
➤ And to understand their tax treatment in detail, the article Corporate tax in Andorra is highly recommended.

🤝 Negotiating the price: how to transform a technical range into a viable agreement

Key factors influencing negotiation include:

• realistic expectations,
• payment structure (earn-outs, deferred payments, conditions),
• dependence on founders or key individuals,
• income stability,
• buyer synergies,
• warranties and representations,
• intangibles owned by the company.

An experienced advisor:

• moderates expectations,
• translates risks into concrete adjustments,
• avoids deadlocks,
• helps build balanced, long-lasting agreements.

Negotiation is not an arm-wrestling match: it is a technical exercise applied to divergent interests. A valuer with transversal expertise can assist in bridging positions and clarifying the interpretative differences between parties.

Conclusion

The value of a business is never an isolated number. It results from a combination of analysis, prudence, risk anticipation and a genuine understanding of the business model. It also requires considering each party’s sensitivities and personal context, both of which influence positions as much as the figures do.

It is common for the seller to mix economic value with emotional components, and for the buyer to project expectations that may be overly optimistic — leading to overpayment — or overly conservative — distancing them from the seller’s range.

A neutral external valuation allows decisions to be made with clarity. A solid due diligence process prevents surprises. And a knowledgeable advisor transforms a complex transaction into an orderly, safe and informed process.

📩 If you are considering buying, selling or contributing shares in a company, we can help you assess its value, conduct a due diligence or review its accounting with technical rigour. Request your meeting below or contact us via the form.

Last updated: November 2025