Start with the exit being proposed
Is one shareholder leaving, are the remaining owners buying the interest, or is another structure being considered? Record the company, share class, number of shares and proposed parties. Identify shareholder loans separately. The commercial intention is a starting point; the transaction structure and governing documents need appropriate legal and tax advice.
An agreed valuation brief helps each party understand the question being answered. It should identify intended users, required date, relevant documents and any appointment procedure. Explain disagreements or existing adviser relationships before a provider is instructed.
Read the rights before doing the arithmetic
Voting, distribution, transfer and exit rights can affect the analysis of a particular holding. A shareholder agreement or the articles may prescribe a basis or process. A controlling holding and a smaller restricted interest should not automatically be assumed to have identical value per share. Equally, a minority discount should not be applied mechanically without considering the instructions and circumstances.
For an explanation of the percentage question, read why a minority stake is more than a calculator exercise.
Build a shared record of the evidence
| Evidence | Question it helps resolve |
|---|---|
| Accounts and current trading | Which period and performance form the starting point? |
| Proposed earnings adjustments | What is accepted, disputed or still unsupported? |
| Cash, debt and shareholder loans | Which items belong in the equity analysis or remain separate? |
| Ownership documents | What rights and valuation instructions apply? |
| Payment proposal | What is paid immediately, later or subject to conditions? |
Keep a dated issue list rather than circulating several unexplained versions of adjusted profit. The financial adviser’s role, independence requirements and permitted use of the report should be clear.
Compare the value conclusion with the payment proposal
The value of an interest and the buyer’s payment capacity are connected but different questions. A fixed amount payable later creates a different cash pattern from money at completion. An earn-out adds performance conditions. Shareholders should understand timing, obligations and uncertainty rather than compare only the total shown on an offer letter.
See the guide to earn-outs and fixed deferred payments. Legal enforceability and personal tax require their own assessment.
Agree a proportionate engagement
Tell us what is changing, who needs the valuation, which documents exist and whether there is a deadline. We assess suitability, conflicts and the required scope before agreeing the output and fee. A commercial valuation is not automatically appropriate for court, tax or another third party. Confidential records can follow through an agreed sharing process.
Your starting checklist
- Exact interest and proposed exit structure.
- Valuation date, purpose, recipients and any prescribed instructions.
- Current records, share documents and separate loan balances.
Frequently asked questions
Is a 25% holding always worth 25% of the whole company?
No. That is an arithmetic starting point. Rights, restrictions, the valuation basis and governing instructions need consideration before concluding the value of a holding.
Can one adviser act for both sides of a buyout?
The proposed role, conflicts, independence and intended users must be assessed before acceptance. Do not assume a shared report or separate representation is suitable without discussing the circumstances.
Can the valuation guarantee an agreed exit price?
No. It provides analysis for the agreed purpose and assumptions. Actual agreement also depends on negotiations, legal terms, financing and the parties’ decisions.
Consult EFC preparation guidance. Examples are hypothetical and do not represent client results or a company-specific valuation. Any professional work requires an agreed scope and intended use.