IDW S1 Business Valuation
Reliable IDW S1 Valuation Reports Based on the Simplified Income Approach
Whether you are planning to sell a business, transfer ownership of company shares, or resolve shareholder disputes, an objective and reliable business valuation is essential in a variety of situations. With the IDW S1 method, you can rely on an established and recognized approach that ensures objective and reliable business valuations as a valuation standard.
In addition to interim management and management consulting services, we are your partner for IDW S1 business valuations using the income approach. Benefit from our many years of experience and independence with one of the most important valuation methods available.
When should business valuations be conducted in accordance with IDW S 1?
Standard 1 of the Institute of Public Auditors in Germany (IDW) for business valuation can be used for a variety of valuation purposes.
- Are you planning to sell your business? Use the IDW S 1 methodology as a recognized standard for a sound business valuation. This provides you with an objective range for a realistic selling price and allows you to enter negotiations with potential buyers on a competent footing.
- Are you considering purchasing a company? Use the IDW S1 valuation to establish an objective and solid valuation basis that creates a factual framework for purchase negotiations and builds trust among all parties involved.
- Do you, as a taxpayer, need a valuation for the tax office? Here, too, applying the IDW S1 method helps provide a reliable basis for arguments with tax authorities and other third parties, e.g., in the case of exit taxation.
Schedule a no-obligation consultation with our experts today!
An Overview of Our Strengths and Values
You can expect more from BlueMomentum Consulting than from traditional auditors, institutions, or tax consulting firms. We are not solely interested in accurately determining the value of your company: Because our experts primarily serve in an advisory capacity, you can count on receiving practical, actionable guidance to help you successfully implement your plans.
- We identify factors and potential characteristics of the company being valued that may affect its current earnings value and future economic performance.
- We have extensive experience with partnerships and privately held corporations and understand the levers that can be used to effectively enhance earnings value.
- We are thoroughly familiar with the dynamic complexity of modern business life and understand how seemingly minor factors can significantly influence a company’s profitability. As part of our valuation work, we make you aware of these influencing factors and show you how to leverage them.
- Through our consulting services, we actively support you in developing strategic approaches and opportunities to increase annual earnings.
- Whether it involves tax law, inheritance law, or corporate law, depending on the reason for the valuation, legal aspects must be considered in addition to the application of the income approach. We are, of course, also well-versed in these areas to help you avoid potential disputes with the tax authorities or among your shareholders. We involve legal experts in complex engagements to ensure you receive legally sound results from us.
Business Valuation in Accordance with IDW S1 and Additional Services
In addition to business valuations in accordance with IDW S1—which we document for you in a clear and transparent manner—we also provide advisory support in related areas. After applying the valuation methodology, we are happy to derive a professional assessment of your strategic and operational risks, as well as sound business strategies, from the valuation report.
Should the liquidation of your company or individual business units be imminent, we apply the liquidation value method to determine a company value appropriate to the circumstances.
In addition, we act as proven specialists for commercially used properties and commercial real estate, where income alone is not the sole basis for an objective valuation.
Read moreSchedule a no-obligation consultation with our experts today!
Our Approach Depending on the Type of Valuation
Unless liquidation or winding-up is planned, the income approach in accordance with the German Valuation Act (BewG)—as last revised and amended effective 2023 in accordance with IDW S1—is the appropriate standard to choose. For the IDW S1 appraisal based on the income approach, your company’s expected future earnings are discounted to the present day. Future risks associated with business activities play a decisive role here, including dependence on the entrepreneur, market diversification, and the degree of internationalization.
Differences in the fundamentals of the valuation arise in the case of a planned liquidation using the liquidation value method. Here, all inflows and outflows resulting from the winding up of business operations, the termination of personnel, and the sale of all your company’s assets are taken into account as of the specified valuation date. Even in the case of a planned restructuring, the liquidation value serves as a benchmark for the minimum income value for shareholders and financiers to determine whether a company that is fundamentally capable of being restructured is worth restructuring.
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More InformationDo you have questions about business valuation according to IDW S1?
Our experts in objective business valuations according to IDW S 1 and other established standards are here to support you as trusted and experienced partners. Lay the groundwork today to use the income approach as a reliable basis for the sale of your business or as a strategic foundation for upcoming sales or acquisition processes. Schedule a consultation with one of our experts.
Read moreFAQ on IDW S1 Valuation
What distinguishes a business valuation under IDW S1?
The IDW S1 standard focuses on valuing future earnings using the income approach or the DCF method. The standard defines seven core principles for business valuation and forms the foundation for professional business valuations in Germany. The valuation focuses on future financial returns. Under this valuation standard, the resulting cash flows are considered after taxes, specifically at the shareholder level. The valuation does not take into account potential synergy effects of specific acquirers, but rather considers the company on its own merits.
What is the methodology for business valuation according to IDW S1?
For business valuation according to IDW S1, a financial projection covering a period of approximately three years is required. The discount rate under IDW S1 is calculated individually for each valuation occasion. The process is carried out in several phases, including a historical analysis, a market assessment, and detailed business and financial planning. Validation is often performed using comparative methods, such as the multiples approach.
What documents are required for a business valuation using the IDW S1 method?
To perform a sound business valuation, our appraisers require comprehensive financial records, and detailed integrated planning is necessary to determine future earnings. Depending on the complexity of the business and the availability of data, preparing a transparent and reliable IDW S1 appraisal report takes approximately two weeks.
When should the IDW S1 valuation method be chosen?
The standard is commonly applied in cases of business succession, shareholder disputes, and legal disputes. Unlike the equity method, the valuation is based not on available cash flow, but solely on assumptions regarding future distributable earnings.
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