Business Valuation Mandate in a Family Succession Context

Mandate Description

The objective of the mandate was to determine the fair economic value of the company prior to its acquisition, based on a comprehensive accounting and financial analysis.

The assignment was carried out in the context of a family succession, where emotional considerations played a central role.

The objective was to reconcile the rigour of professional valuation methodologies, in accordance with Swiss and international standards, with the sensitivity inherent to a transition built on trust, continuity and the preservation of family assets.

The analysis focused on historical financial statements, sustainable earnings capacity and long-term operational prospects, while taking into account the specific characteristics of a capital-intensive sector governed by multi-year contracts.

Key Issues

The main challenges of the mandate were to ensure an independent and technically robust valuation within a highly emotional context.

A key objective was to establish an equitable value that would preserve family cohesion.

The valuation also required distinguishing asset value from actual operating performance.

Finally, the assignment aimed to reconcile the financial logic of the transaction with the social and human considerations of both the buyer and the seller.

Approach and Results

The valuation relied on several complementary approaches in line with practices recognised by business valuation professionals.

• A discounted cash flow method was applied, based on the projection of operating cash flows adjusted for working capital requirements.
• A market multiple approach was also used, based on a panel of comparable transactions in the sanitation sector in Switzerland and neighbouring countries.
• In addition, the practitioners’ method was implemented, combining earnings-based value with asset value derived from restated financial statements.

The analysis resulted in a coherent valuation range that reconciled rigorous financial analysis with the human considerations specific to family succession.

This assignment also helped to objectify discussions between the parties by establishing a reassuring numerical and methodological framework in a context where emotional and rational factors were closely intertwined.