Most German Mittelstand owners do not know the value of their business. They estimate it. Sometimes from gut feeling, sometimes based on a tax-calculation from their accountant, sometimes from hearsay about a competitor's sale. In Q1/2026 EBITDA multiples in the German Mittelstand range from 4.1x to 7.3x, depending on sector, size and growth. A rigorous valuation combines three methods, normalises EBITDA for owner-specific items, and delivers a value corridor that holds up at the negotiating table. Owners who know their company's value plan with confidence. Those who merely guess risk jeopardising their life's work.
Table of Contents
- Why 2026 Is the Year of Honest Valuation
- Value Is Not Price: The Key Distinction
- When a Valuation Really Makes Sense
- The Five Valuation Methods Without Jargon
- Current Multiples Landscape Q1/2026
- Normalised EBITDA: Where True Value Lies
- Value Drivers and Value Killers in the Mittelstand
- The Nine Most Expensive Valuation Misconceptions
- Value Optimisation: 12 to 36 Months Before the Transition
- The Valuation Process: What Actually Happens
- Hamburg and Northern German Specifics
- Frequently Asked Questions about Business Valuation
Why 2026 Is the Year of Honest Valuation
You want to know what your business is worth. Around 109,000 German Mittelstand owners are asking themselves this question every year. That is what KfW Research calculated in January 2026. The answer is rarely as clear-cut as gut instinct would suggest.
The gap between expectation and reality has become measurable. The average desired sale price in the German Mittelstand stands at EUR 499,000 in 2025. Six years ago it was EUR 372,000. That is an increase of 34 percent in nominal terms. Adjusted for inflation, around 9.5 percent of real growth remains. The median has more than doubled from EUR 175,000 to EUR 375,000.
At the same time, the DIHK reports in its 2024 Business Succession report that 37 percent of advised outgoing owners are asking excessive prices. 28 percent struggle to let go emotionally. Advisory figures reached a historic high in 2024 with 9,636 Chamber of Commerce consultations. On the other side of the table sit 5,620 businesses without a succession candidate. The ratio has doubled since 2019.
These figures are not a market report but a warning. Owners who overvalue their business risk the failure of the handover. KfW Research notes soberly that 30 percent of all succession processes fail due to disagreement over the purchase price. The remedy is not expensive. It is called: methodical valuation, honest EBITDA normalisation, and a realistic view of the market.
Value Is Not Price: The Key Distinction
Three terms are often confused in practice. Value is a calculated figure derived from methodological assumptions. Price is what ends up on the contract. And market value lies somewhere in between, depending on competitive bidding and the strategic interest of the buyer.
Warren Buffett put it this way:
"Price is what you pay, value is what you get."
Warren Buffett
Translated into practical terms: price is the negotiating variable. Value is the substance behind it. Both correlate but are not identical.
The Analytical Approach
A rigorous valuation does not deliver a single figure but a corridor. The boundaries are defined by different methods. Net asset value sets the floor, the earnings-based approach the methodological centre, the multiple method provides market reference, and discounted cash flow the forward-looking perspective. This value corridor is what an honest appraiser can deliver. Anything that sounds more precise is a pretence of accuracy.
The Reality at the Negotiating Table
In an actual sale process, several things happen simultaneously. Strategic buyers factor in synergies and often pay 10 to 25 percent above stand-alone value. Financial investors adhere strictly to cash-flow multiples and do not accept synergy projections. Local competitors often pay more because they want to secure regional market share. A competitive bidding process with three to five qualified buyers typically lifts the sale price by 15 to 25 percent compared to bilateral negotiations. This figure is consistently reported in M&A practice and aligns with market experience in recent years.
Value Corridor Instead of a Single Figure
A professional valuation therefore does not say "your business is worth EUR 5.3 million." It says: "The value corridor is between EUR 4.7 million and EUR 5.8 million. The most likely negotiated value in a structured bidding process is EUR 5.2 to 5.5 million." That is the honest answer. Anything that sounds more precise is methodology theatre.
When a Valuation Really Makes Sense
Most owners think of a sale when they hear the word valuation. That is the most common but not the only application. A solid valuation is worthwhile in at least ten situations.
You are planning a family succession and want to determine a fair transfer price that treats siblings equally. You are considering an external sale and need a realistic expectation before your first conversation with buyers. You are gifting shares during your lifetime to the next generation and need to determine the taxable value. You are planning your estate and want to calculate compulsory share claims for non-active heirs. You are going through a divorce and the business is subject to the equitable distribution of assets.
Further occasions arise. A co-shareholder is departing and the compensation clause in the articles of association needs to be specified. You want to give employees a stake and need a clean valuation anchor. You are planning bank financing and require an objective value as collateral. You are moving abroad and need to settle the exit tax. Or you simply want to manage the business by value and align your operational decisions with the company's value, without any intention to sell.
In all these cases, a valuation is not only advisable but often legally required. The depth of valuation you need depends on the occasion. For an initial internal check, an indicative valuation suffices. For an inheritance or court proceedings, you need a full appraisal under IDW S 1.
The Five Valuation Methods Without Jargon
There are five practically relevant valuation methods in the German Mittelstand. Three of them provide useful figures for your situation. One regularly leads to error. Here are all five, without an IDW deep-dive but with a clear statement on practical applicability.
Earnings Value Method (IDW S 1)
This is the German valuation standard, maintained by the Institute of Public Auditors in Germany (IDW). It calculates the present value of all future distributions, discounted to today using a capitalisation rate that reflects the risk of your sector and business.
The appeal of the method lies in its forward-looking orientation. It values what is to come, not what was. The downside: the assumptions are complex, the range of discussion wide, and the result is sensitive to input parameters. Small changes in the interest rate lever the value significantly. IDW S 1 is recognised by courts, tax authorities and banks.
Discounted Cash Flow
The Anglo-Saxon sister of the earnings value method. Instead of distributions, free cash flows are discounted, often in two phases: detailed three-to-five-year planning plus a terminal value. DCF is international standard. In the German Mittelstand it is rarely applied on its own, more often as a cross-check on the earnings value. The reason: most SMEs do not have integrated three-year planning at the depth DCF requires. If your accountant offers you a "DCF model," you should ask where the cash-flow projections come from.
Multiple Method
The market standard in SME M&A. You take a value-determining key figure (revenue, EBIT or EBITDA), multiply it by a sector- and size-specific factor derived from completed transactions, and arrive at the enterprise value. From this you deduct net financial debt and obtain the equity value, i.e. the value of the shares.
Multiples are fast, market-oriented and easy to communicate. In 2026 they form the basis in 87 percent of SME valuations using market reference as EV/EBITDA, in 62 percent also as EV/EBIT. The downsides: multiples are backward-looking and comparison-based. They ignore growth spurts, restructurings and sector changes. And they are extremely interest-rate sensitive. What was 11x in 2021 is often only 8x in 2025.
Net Asset Value Method
You value all assets at market value and subtract liabilities. The result is the net asset value. In German valuation law it forms the lower bound under Section 11 (2) sentence 3 of the Valuation Act. For a productive business with earnings power, the net asset value is secondary. It only becomes relevant where earnings prospects are so poor that liquidation would be more profitable than continuation.
"A business may appear on paper to be worth millions under the net asset value method. But if the business model is outdated and no longer generating returns, no strategic investor will pay that price."
Sebastian Goering, Managing Partner, Euroconsil
Simplified Earnings Value Method (Valuation Act)
This is the tax authority's method. It calculates the average annual earnings of the last three years, multiplied by the fixed capitalisation factor of 13.75. This factor has been unchanged since 1 January 2016 and remains in effect in May 2026. The method is prescribed by law for inheritance and gift tax. It is simple but rarely realistic. The implied required return of around 7.27 percent does not suit sectors with high owner-dependency or volatile business performance. The result: tax values frequently exceed market values significantly. For the tax burden this is often disadvantageous. Section 198 of the Valuation Act does however permit proof of a lower fair market value through an IDW S 1 appraisal.
Additionally, for the skilled trades sector, the AWH standard of the Central Association of German Skilled Crafts applies. This is a modified earnings value method with higher capitalisation rates between 15 and 25 percent, reflecting the typical owner-dependency of smaller trade businesses.
Current Multiples Landscape Q1/2026
If you want to understand where your business stands in the market today, you need current multiples. The following table shows EBITDA multiples for selected sectors from the Q1/2026 DUB dataset. The figures relate to the German Mittelstand and are broken down by three size categories.
| Sector | Micro Cap (<EUR 5m) | Small Cap (EUR 5-50m) | Mid Cap (>EUR 50m) |
|---|---|---|---|
| Mechanical and plant engineering | 4.0-4.9x | 4.5-5.8x | 5.6-7.1x |
| Metal processing | 3.4-4.2x | 4.0-5.4x | 4.7-6.8x |
| Electrical engineering | 4.2-6.0x | 5.5-8.0x | 7.2-8.8x |
| Medical devices | 5.9-7.5x | 7.0-9.0x | 7.9-9.8x |
| IT services | 5.2-6.7x | 6.1-8.3x | 7.1-9.5x |
| Software | 6.2-7.7x | 7.7-9.7x | 8.3-10.4x |
| Construction and trades | 3.7-5.1x | 4.4-5.5x | 5.8-7.0x |
| Transport and logistics | 3.4-4.9x | 4.0-5.6x | 5.2-7.0x |
| Wholesale and retail | 3.0-4.5x | 4.4-5.5x | 5.1-6.5x |
| B2B services | 3.7-5.2x | 5.0-6.8x | 6.5-8.0x |
The cross-sector average in the Mittelstand stands at 5.7x EBITDA. That is the sober reality. The Argos Index, which covers the European mid-market, came in at 8.3x in Q4 2025, its lowest level since 2014. 27 percent of all transactions captured there were below 7.0x. Anyone planning today with 2021 multiples is comparing themselves with a market phase that no longer exists.
The Size Effect
Attentive readers will notice the jump across size categories. A mechanical engineering business with EUR 1 million EBITDA is typically valued at 4.4x. The same business with EUR 10 million EBITDA achieves 6.4x. That is 45 percent higher without any change to the operational business. The reason: larger businesses have professional reporting, a second management tier, a broader buyer pool and more liquidity in their shares. This is the logic behind buy-and-build strategies that have been driving the consolidation wave in the DACH Mittelstand since 2024.
From Enterprise Value to Equity Value
Multiples deliver the enterprise value, i.e. the value of the operating business. What you as a seller ultimately receive is the equity value. The bridge between them is net debt. You deduct bank and trade liabilities, add cash and non-operating assets. Pension commitments are treated either as a net debt item or addressed operationally in EBITDA normalisation, depending on the buyer. One million euros in pension provisions can therefore quickly cost you one million euros in sale proceeds, sometimes more depending on the structure.
Normalised EBITDA: Where True Value Lies
The most important value lever in the Mittelstand is not the multiple but the EBITDA being multiplied. More precisely: the normalised EBITDA. Practitioners report levers of between 20 and 50 percent between reported and normalised EBITDA. At a 5x multiple, EUR 100,000 of add-back means exactly EUR 500,000 of value creation. Rigour pays.
Typical Normalisations
Owner-managed businesses rarely show a "buyable" EBITDA in their accounts. It is interspersed with private items, one-off effects and non-market-rate contracts. A good appraiser goes through systematically and corrects.
The largest item is often the owner's salary. In partnerships it does not appear in the income statement at all because the owner makes private drawings. Here a notional management salary is deducted. In GmbHs with an inflated managing director's salary, the difference to the market rate is added back. The BBE 2024 study on managing director remuneration, which tax authorities also reference, cites a market-rate figure of around EUR 150,000 for GmbHs with revenue below EUR 1 million, and around EUR 169,000 for the EUR 1-2.5 million revenue range.
Additional normalisations include: private vehicles for owners and family; travel that is partly privately motivated; memberships in clubs whose business purpose is hard to defend; tenancy arrangements with the shareholder at non-market rates; family members on the payroll whose actual work must be scrutinised; one-off expenditure such as restructurings, severance payments or a one-off legal dispute. Against these must be set one-off income that has artificially inflated EBITDA and cannot be expected to recur.
Practical Example
A northern German mechanical engineering business with EUR 6 million in revenue shows EBITDA of EUR 800,000 in its accounts. That is the figure the accountant regularly quotes. A structured normalisation produces the following.
| Item | Amount |
|---|---|
| Reported EBITDA per accounts | EUR 800,000 |
| - Notional owner's salary (partnership) | -EUR 160,000 |
| + Private vehicles, owner and spouse | EUR 35,000 |
| + Spouse on payroll (60% of duties) | EUR 60,000 |
| + One-off workshop relocation costs | EUR 120,000 |
| + Legal and court costs, isolated case | EUR 45,000 |
| + Private travel through the company | EUR 25,000 |
| + Market-rent adjustment, shareholder property | EUR 75,000 |
| Normalised EBITDA | EUR 1,000,000 |
At a multiple of 5.1x, the enterprise value is EUR 5.1 million. Applying EUR 800,000 x 5.1 gives EUR 4.08 million. The difference of around EUR 1 million arises solely from rigorous normalisation. This is not a trick. It is the standard work of a good M&A adviser.
Pension Commitments: The Underestimated Deal-Breaker
Pension commitments deserve a chapter of their own. In Germany, EUR 700 to 800 billion in direct pension commitments are outstanding, more than two thirds without matching coverage.
"Buyers insist that pension commitments are removed from the balance sheet before a business acquisition."
Sebastian Uckermann, Pension Commitment Specialist
Transferring them to an insurer typically costs around 280 percent of the tax-balance-sheet provision. That is a significant sum. But the alternative is often a failed deal. Owners with pension commitments on the balance sheet should act 12 to 18 months before the handover.
Value Drivers and Value Killers in the Mittelstand
The EBITDA multiple is not a fixed sector figure. It moves within the range shown above depending on business quality. Six factors drive the multiple upward. Seven factors pull it down.
What Buyers Reward
Recurring revenue. Recurring revenue is the gold standard. An IT services provider with 70 percent maintenance contracts is valued higher than one with 70 percent project business. The premium ranges between half a multiple and two additional multiples, and considerably more in SaaS models.
Diversified customer base. If the top three customers account for less than 30 percent of revenue, the business is sellable. If a single customer contributes 50 percent or more, the multiple drops immediately by 1 to 2 points or the buyer pool shrinks to strategic investors with high risk tolerance.
Owner-independence. A second management tier that can sustain the business after the owner's departure is invaluable. Buyers apply a key-person-risk discount when the owner is central to operations. Distributing responsibility across two or three shoulders lifts the multiple by 1 to 2 points.
Scalable business model. If the next euro of revenue does not cause the next euro of variable costs but flows to the margin, the business is scalable. Buyers pay scalability premiums because they expect continued growth at stable or improved margins after acquisition.
Compliance maturity. CSRD compliance, Supply Chain Act, data protection, ISO certifications, NIS-2 cybersecurity. What sounds like bureaucracy is hard capital in an M&A process. Clean compliance can lift the multiple by up to one point.
Growth. Organic growth of 10 percent or more per year generates a growth premium. Buyers pay for the trajectory, not the status quo.
What Buyers Are Deterred By
Owner-centricity. If the owner personally manages all key customers, leads all supplier negotiations and dominates sales, the multiple falls by 1 to 2 points. Some buyers walk away entirely at key-person risk.
Customer concentration. Top three above 40 percent is the critical threshold. Above 60 percent, the buyer pool thins out.
Volatile margins. Fluctuations of 50 percent or more in EBITDA from year to year make valuation difficult and depress the multiple.
IT investment backlog. Businesses still running on own-operated servers, outdated ERP systems without cloud connectivity and old office software create investment requirements for the buyer in the first 24 months. This is deducted from the price.
Compliance gaps. The mirror image of compliance maturity. Owners who avoid GDPR audits, do not address CSRD or ignore Supply Chain Act obligations receive multiple discounts or earn-out structures with compliance conditions.
Pension commitments. See above. Frequent deal-breaker.
Expiring leases or location risks. If the main production site has expiring leases within five years, or the municipality is rezoning the industrial area, this will cost buyers. These risks must be addressed early.
The Nine Most Expensive Valuation Misconceptions
The same misjudgements recur in our advisory practice. They regularly cost owners six-figure amounts. Here are the nine most expensive.
Misconception 1: "My accountant has already done this." Your accountant calculates using the simplified earnings value method of the Valuation Act. This is designed for the tax return, not for the market. It ignores concentration risks, owner-dependency, market volatility and sector cyclicality. Result: frequently far too high, or in growth sectors, far too low.
Misconception 2: "The bank worked it out." The bank calculates from a lender's perspective. Its creditworthiness assessment is a worst-case scenario with safety discounts for a forced sale. It has nothing to do with a strategic buyer who needs your market position.
Misconception 3: "I know my sector better than any appraiser." That is true operationally. But in valuation, the so-called endowment effect is at work. You overvalue what you have built.
"Owners often price in the efforts that went into building the business, a so-called sweat-equity premium. This is not tradeable in the market."
Dr Michael Schwartz, KfW Research
Misconception 4: "Competitor X sold for Y, so I am worth Y too." No two businesses are identical. The buyer may have paid strategically more because it needed the region, the licences or the key personnel. It may have been an asset deal with step-up effects. Earn-outs obscure the effective purchase price. Without knowing the deal, the comparison is worthless.
Misconception 5: Sentimental value. Sebastian Goering, Managing Partner at Euroconsil, puts it succinctly:
"A buyer pays for tomorrow's potential, not for yesterday's blood and sweat."
Sebastian Goering, Managing Partner, Euroconsil
The emotional component is real and legitimate. But it belongs in the question of whether you want to sell at all, not in the valuation.
Misconception 6: Outdated comparison multiples. Multiples are interest-rate sensitive. The Argos Index for the eurozone fell from 11.6x in Q4 2021 to 8.3x in Q4 2025. Anyone calculating with low-interest-rate era benchmarks is planning in a reality that no longer exists.
Misconception 7: Book value equals market value. Net asset value is the floor, not the market value. Insisting on net asset value signals to the market that earnings power is not sustainable. This deters the best buyers.
Misconception 8: "Revenue times one is my value." Simplistic revenue multiples ignore margins and earnings quality. KfW data shows: construction businesses under EUR 20 million in revenue typically achieve only 0.25x to 0.5x revenue. Software businesses achieve 1.3x to 2.3x. Blanket revenue multiples regularly lead to gross misjudgements.
Misconception 9: "I am not selling, so I do not need a valuation." This is the most expensive misconception. Valuation is a management tool, not a sales tool. Anyone who wants to organise inheritance, gifting, shareholder buyout, compulsory shares, exit tax or loan collateral properly needs an objective value. Anyone who wants to manage by value needs it as a compass for investment decisions.
Value Optimisation: 12 to 36 Months Before the Transition
Realistically, 15 to 30 percent value growth in 18 months is achievable with a structured approach. Here are the most effective levers.
Operational EBITDA levers. Optimise margins through pricing, procurement and process efficiency. Prioritise growth areas and close unprofitable business lines. Reduce working capital, drive cash conversion above 70 percent. These measures act directly on the EBITDA base and are leveraged by the multiple.
Reduce risk discounts. Build a second management tier, delegate responsibility, document owner-independence. Actively reduce customer concentration by acquiring new key customers. Extend contract durations where possible. Standardise documentation and processes so that a new owner can take over the business.
Clean up the balance sheet. Separate private items. Review pension commitments and transfer them if necessary. Bring shareholder lease agreements to market rates. Align family members on the payroll with their actual duties or document them transparently.
Make growth visible. If you can grow, you should demonstrate it before the sale. A three-year plan with verifiable growth drivers builds buyer confidence. Growth premiums of 1 to 3 multiple points are realistic.
Close compliance gaps. Build CSRD reporting, document Supply Chain Act compliance, demonstrably implement data protection, initiate NIS-2 measures. These topics act as multiple levers and simultaneously prevent deal-breakers in due diligence.
An anonymised example from our practice: a Hamburg-based IT services provider had 30 percent recurring revenues and a multiple of 6.0x 18 months ago. Through systematic conversion to maintenance and service contracts, the recurring share today stands at 70 percent. The multiple is negotiating at 7.5x in the ongoing buyer outreach. At EUR 1.2 million EBITDA, that is EUR 1.8 million more in sale proceeds. Pure business model optimisation, without any EBITDA increase.
The Valuation Process: What Actually Happens
A valuation runs in a structured manner across three depth levels with different costs and applications.
Depth Levels and Cost Framework
| Depth Level | Cost | Duration | Application |
|---|---|---|---|
| Indicative valuation | EUR 2,000-5,000 | 1-2 weeks | First conversation, internal planning, negotiation anchor |
| Valuation report | EUR 5,000-15,000 | 2-4 weeks | Sale preparation, shareholder dispute, bank documentation |
| IDW S 1 full appraisal | EUR 15,000-50,000+ | 4-8 weeks | Court, tax authority, inheritance, squeeze-out |
Documents You Will Need
Three to five annual financial statements with income statement, balance sheet and notes. The current management accounts (BWA). Tax assessments for the last three years. Articles of association and shareholder resolutions. Current customer and supplier structure with concentrations. Lease agreements for main locations. Managing director and shareholder agreements. Capital expenditure planning and integrated three-year forecast.
Who May Carry Out a Valuation
Legally, anyone may carry out a valuation in Germany. Court and authority-compliant appraisals are prepared by auditors, publicly appointed and sworn experts, tax advisers with a valuation specialisation, and Certified Valuation Analysts. In the skilled trades sector, AWH-certified advisers are the standard. For transaction-oriented valuations in SME M&A, experienced M&A advisers with sector knowledge and completed mandates are often the more direct route, because they command not only the methodology but also the negotiating value.
Hamburg and Northern German Specifics
Several sectors shape the valuation landscape in northern Germany. You need to know these to assess your value realistically.
Logistics and transport are disproportionately represented in the Hamburg economic region. Multiples for small caps of 4.0x to 5.6x are at the lower end, driven by thin margins and high cyclical dependency. The maritime economy with shipping companies, port service providers and maritime industrial suppliers is a Hamburg speciality that fluctuates strongly internationally and is currently under pressure.
Industrial services and technical services around the energy transition, heat transition and fibre-optic roll-out are in strong demand. Buy-and-build platforms of active international investors are consolidating heating and sanitation specialists as well as fibre-optic civil engineering. Multiples for established providers often sit at the upper end of the range. Skilled trades businesses in Hamburg benefit from an above-average succession track record. According to the Succession Monitor Hamburg 2024, around 80 percent of Hamburg acquisitions meet or exceed the revenue level and around 60 percent the profit level of the previous owner. This is significantly better than the national average.
23,000 Hamburg business owners are today 57 years or older. Of these, 18,500 are in Chamber of Commerce sectors and 4,500 in the skilled trades. The average handover age stands at 63.3 years. On the other side, acquirers are on average 39.6 years old. The gap generation between mid-40s and mid-50s that previously made up classic acquisition candidates is demographically thin.
Frequently Asked Questions about Business Valuation
What is my business worth?
There is no single value. Realistic is a value corridor from multiple methods. In the German Mittelstand, the market value typically ranges between 4.1x and 7.3x normalised EBITDA, depending on sector, size, owner-dependency and growth (DUB Q1/2026).
How is a Mittelstand business valued?
Standard practice is a combination of the IDW S 1 earnings value method and a market multiple. Net asset value serves as the lower bound. Owner-managed SMEs additionally require EBITDA normalisation for special influences.
What valuation methods are there?
Four practically relevant methods: earnings value method under IDW S 1, discounted cash flow, multiple method and net asset value method. For skilled trades businesses the AWH standard applies. For tax purposes the simplified earnings value method under Sections 199 ff. of the Valuation Act applies.
What is the difference between value and price?
Value is a calculated figure, price is the negotiation outcome. Strategic buyers often pay synergy premiums; financial investors orient themselves to cash-flow multiples. KfW Research finds that 30 percent of all successions fail due to disagreement over the purchase price.
What does a business valuation cost?
Indicative valuation EUR 2,000 to 5,000. Valuation report EUR 5,000 to 15,000. Full IDW S 1 appraisal EUR 15,000 up well into five figures, depending on complexity.
How long does a valuation take?
Indicative valuation 1 to 2 weeks. Full IDW S 1 appraisal 4 to 8 weeks. For structured sale processes, 6 to 12 months of lead time should be planned.
What documents does the appraiser need?
Three to five annual financial statements, management accounts, tax assessments, articles of association, customer and supplier structure, lease agreements, managing director agreements, capital expenditure planning and integrated three-year forecast.
What is an EBITDA multiple?
A valuation factor that relates enterprise value to normalised EBITDA. In the German Mittelstand currently averaging 5.7x, with a range from 4.1x for construction and retail to 7.3x for software and medical devices.
What does normalised EBITDA mean?
EBITDA adjusted for one-off, non-operating and owner-related items. Typical normalisations: non-market owner salary, private vehicles, family-owned lease arrangements, restructuring costs. Correct normalisation typically increases EBITDA by 20 to 50 percent.
When is a valuation useful?
For succession, sale, inheritance, gifting, divorce, shareholder entry or exit, exit tax, employee participation and bank financing. Also without a specific occasion for value-based management.
Do I need a valuation for inheritance?
Yes. The tax authority applies the simplified earnings value method, which often leads to inflated values. An IDW S 1 counter-appraisal under Section 198 of the Valuation Act can prove a lower fair market value.
What is the typical multiple in my sector?
Q1/2026 in excerpts: construction and trades 3.7x to 5.5x EBITDA, mechanical engineering 4.5x to 5.8x, IT services 6.1x to 8.3x, software 7.7x to 9.7x, logistics 4.0x to 5.6x. Multiples change quarterly with the interest rate environment.
How can I increase the value of my business?
Three levers: sustainably increase EBITDA, reduce risk discounts through a second management tier and diversification, clean up the balance sheet. Start 12 to 36 months before the transition. Realistically 15 to 30 percent value growth in 18 months is achievable.
What is an indicative valuation?
A fast, market-oriented value estimate in a corridor based on multiples and initial EBITDA normalisation. Sufficient for first conversations and internal planning. Cost EUR 2,000 to 5,000.
Is the tax value sufficient for a sale?
No. The tax value is standardised and backward-looking; market value is forward-looking and buyer-specific. Both often diverge by 30 to 100 percent.
What is an IDW S 1 appraisal?
The recognised valuation standard in Germany produced by the Institute of Public Auditors. Based on the earnings value method or DCF. Recognised by courts, tax authorities and banks.
Who may carry out a business valuation?
Legally anyone. Court and authority-compliant appraisals are prepared by auditors, publicly appointed and sworn experts, tax advisers with a valuation specialisation and Certified Valuation Analysts. In the skilled trades sector AWH-certified advisers work. For transactions, experienced M&A advisers are often the more direct route.
How does the appraiser treat my owner's salary?
In partnerships without a managing director salary in the accounts, a market-rate notional management salary is deducted. In GmbHs with an inflated managing director salary, the difference is added back. Market-rate according to the BBE 2024 study for GmbHs with revenue below EUR 1 million is around EUR 150,000 per year.
What are typical value killers?
Owner-dependency, customer concentration risks, missing second management tier, unresolved succession, outdated IT, compliance gaps, high working-capital requirements, unsecured pension commitments and short-term cosmetic measures before the sale.
How reliable are online valuation tools?
They provide initial orientation in a value corridor and do not replace a rigorous valuation. Soft factors such as owner-dependency or concentration risks are only roughly captured. Useful for sanity-checking, unsuitable as a negotiation basis. Our own Company Valuation Calculator provides a first indication based on current DACH multiples and is designed as a starting point, not an end product.
Your Next Step
A rigorous valuation is not an end in itself. It is the foundation of every decision about your life's work. Owners who know their company's value can plan succession, structure their estate, buy out shareholders, systematically drive value creation or initiate the sale process on a realistic basis. Those who merely guess are planning blind.
At Nordvisory we guide Mittelstand businesses in northern Germany through valuation and sale processes. The first step is always a confidential initial conversation with no obligation.
Schedule a free first conversation
Would you like a first indication beforehand? Try our Company Valuation Calculator, which provides a first valuation range based on current DACH multiples Q1/2026.
About the author: Tobias Sutantio is Founding Partner at Nordvisory in Hamburg. Before founding the firm he worked at Houlihan Lokey and has advised on sell-side and buy-side mandates for Mittelstand businesses throughout his career.
This article was published on 7 May 2026 and does not replace individual tax, legal or valuation advice. The multiples cited are average values from DUB SME Multiples Q1/2026 and may differ in individual cases.
Sources and further reading: KfW Nachfolge-Monitoring 2025 (Schwartz/Gerstenberger, Fokus Volkswirtschaft No. 526, January 2026); DIHK Report Unternehmensnachfolge 2024/2025; IfM Bonn data and facts; IDW S 1 as amended 2008 and draft IDW ES 1 n.F. (11/2024); Sections 199-203 of the Valuation Act; DUB SME Multiples Q1/2026; FINANCE magazine multiples; Argos Index Q4 2025; BVK statistics 2025; PwC "Destination Deutschland" 2025; Bain Global PE Report 2026; BDU Whitepaper business succession; BBE study on managing director remuneration 2024; Succession Monitor Hamburg 2024; Euroconsil and Hoeflmayr on EBITDA normalisation practice.
