DOI: 10.21637/GT.2013.1.01.

Alternative Approaches of Corporate Valuation Methods for Small and Medium Sized Enterprises

BENSCH, Tino – JÄGER, Clemens – JÄGER, Tina – HOLSIEPE, Henrik

The traditional methods like su bstance-value, net capital value and discounted cash flow (DCF) methods have proven to be problematic and show some limitations especially regarding the valuation of small and medium-sized enterprises (SMEs). A theoretically correct application of these methods can still leave room for interpretation for an auditor to influence the valuation results. In a nutshell all these methods do not include the most important specific influencing factors on SME valuation in contrast to the valuation of a big company. The IDW (Institut Deutscher Wirtschaftsprüfer) e.g. names the differentiation between private and company assets, the salary of the managing owner and the lack of information or information asymmetry as key differentiation factors. By taking these factors into account the correct valuation of SMEs can be secured. For the valuation of SMEs Busch (2008) and Behringer (2012) invented two different adapted valuation methods that consider the main differences between big companies and SMEs. They both reduce the complexity of the valuation process and include factors like the managing owner, the lack of separation between corporate and private assets.

KEYWORDS: small and medium size enterprises, valuation methods

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