Company Valuations

Medium-sized companies reflecting the character of their owners have no perceivable stock exchange value. A company valuation cannot therefore be reduced to simple calculations.

To determine the deciding value driver of a company, it and its markets must be thoroughly investigated in order to carry out a forward-looking valuation.
This requires knowledge gained from daily practice such as success factors, integrated financial planning, possible risk-loadings and dependencies.
We prepare our valuation report based on the reason for the valuation, the location of its registered offices and the function in which we operate according to recognised standards:

  • the present value of future cash-flow according to the latest version of the IDW (German Auditors' Association);
  • the Discounted Cash-Flow method (DCF);
  • the multiplier method (peer group comparison);
  • the International Association of Consultants, Valuers and Analysts and the German Company Valuation Association (professional valuers) in Germany);
  • the International Accounting Standards Board, e.g. IAS 36 for impairment tests;

Our company valuations are prepared regularly for:

  • sale/purchase of a company, either partially or wholly (share deal);
  • sale/purchase of values based on an asset deal;
  • excluding partners from a GmbH (limited company) by means of a cash pay-out;
  • valuations due to inheritance conflicts;
  • valuations due to family conflicts.

We act both as neutral appraisers and as appraisers for a given party and offer advice, act as intermediaries or present arguments, depending on the task.

M&A Consulting

As a certified fee-based consultant, CFE carries out due diligence examinations, prepares company valuation appraisals and continuation prognoses according to the standards of the IDW as part of recognised valuation methods as our clients wish. Thus, our clients obtain verifiable data and clear information on how the purchase price is calculated before the company is bought or sold (merger or acquisition), investing or embarking on a merger.

The certified competence of CFE guarantees compliance with the usual standards according to IDW, especially "due care" with which the company is examined prior to the acquisition of company shares or real estate or an IPO.

A due diligence examination uncovers "deal-breakers", i.e. issues that might prevent a purchase such as contaminated ground or buildings in the case of real estate or unresolved trade mark issues if a company is being purchased.

Buy-Side Due Diligence
The prospective purchaser of a company has the due diligence examination carried out. He provides the necessary specialists (M+A advisors, tax advisors, auditors, appraisers etc.) who scrutinise the company to be purchased. The result of the examination goes into a report which is used as the basis for further price negotiations, contractual provisions in the purchase agreement and for the financing negotiations.

Vendors' Due Diligence
The vendor of a company has a due diligence examination carried out to prepare his company for a possible sale. The advantages are clear:

  • the vendor is aware of the factors that add value to the company before it is marketed;
  • the company can be set up in good time for transparent marketing;
  • the vendor retains control during the negotiations and is not caught unawares by any results of the purchaser's due diligence;
  • all prospective purchasers get the same information. This considerably reduces the transaction costs and saves the vendor time;
  • there is no need to negotiate with too many prospective purchasers who may have the wrong impression about the company;
  • presenting the results of the vendor's due diligence to all potential purchasers before exclusivity is awarded leads to more intense competition;
  • the time taken is reduced and the purchase prices obtained are usually considerably higher;
  • setting up, administering and managing data-rooms.

Due Diligence before an IPO
Another reason for due diligence examinations is a company's IPO. According to Section 3 of the German Securities Prospectus Act, the share offer must be examined for the information of the future investors. In an IPO, a due diligence essentially examines the completeness and correctness of the prospectus.

Our due diligence examinations are subdivided into the following areas:

  • financial due diligence;
  • tax due diligence;
  • legal due diligence;
  • commercial due diligence.

and a few project-related partial aspects in the following areas:

  • outsourcing due diligence;
  • strategic due diligence;
  • market due diligence;
  • human resources due diligence;
  • technical due diligence;
  • environmental due diligence.