Stéphane Rouvez, Managing Director Corporate Finance and Jean-Philippe Bonte, Expert Lead Family Business provide valuable insights on this topic.
"}},{"componentType":"testimonial","testimonialList":[{"authorInfo":{"authorName":"Stéphane Rouvez","image":{"extension":"jpg","original":"https://assets.ing.com/m/372196b921326d19/original/Stephane-Rouvez.jpg","transformBaseUrl":"https://assets.ing.com/transform/eca6f691-b1d3-41fc-973c-6264df51129b/Stephane-Rouvez","type":"image","width":4002},"jobTitle":"Managing Director Corporate Finance"},"testimonialText":{"body":"Before considering a sale, you need to estimate the value of the shares you want to sell. This is a key part of the process and also the first step."}},{"authorInfo":{"authorName":"Jean-Philippe Bonte","image":{"altTextNL":"Jean Philippe Bonte","extension":"jpg","original":"https://assets.ing.com/m/1acc44cb5c9bb788/original/Jean-Philippe-Bonte.jpg","transformBaseUrl":"https://assets.ing.com/transform/f6e9819a-9f41-4953-901e-0a6ce3eb5499/Jean-Philippe-Bonte","type":"image","width":66},"jobTitle":"Expert Lead Family Business"},"testimonialText":{"body":"A fair and equitable business valuation is a prerequisite for any sale"}}]},{"componentType":"sectionTitle","title":"ING’s position on business valuations"},{"componentType":"paragraph","richBody":{"value":"While ING does not perform business valuations on request, it is regularly required to do so in the context of company sales. As a result, the bank has long-standing expertise in this matter. Business valuation is also one of the topics the bank covers in detail during its Family Entrepreneurs Get Togethers (video in FR). Moreover, ING also organised the intra-family sale of the Dandoy biscuit factory in 2023.
‘If ING does not perform the valuation itself, it can always refer its clients to reliable partners,’ says Stéphane Rouvez.
"}},{"componentType":"sectionTitle","title":"Why business valuations are a key step"},{"componentType":"paragraph","richBody":{"value":"Jean-Philippe Bonte has the answer to this question. ‘A fair and equitable business valuation is a prerequisite for any sale, whether this involves transferring all or part of the shares to a third party or a family member, such as the owner’s child.’ This step is even more critical if the other children are not interested in joint ownership.
Stéphane Rouvez, meanwhile, highlights another aspect: ‘The valuation is not the actual price for which the company will change hands. The buyer and seller each conduct their own business valuation. However, the price they ultimately settle on is always the result of a compromise.’
"}},{"componentType":"sectionTitle","title":"Different valuation methods"},{"componentType":"paragraph","richBody":{"value":"Discussions about the sales price are usually fuelled by the fact that there are several different valuation formulas, and they are not foolproof.
‘A business valuation is always complex. Every company is unique, and several external factors must be considered, including payment terms, conditions, guarantees, and the buyer’s commitments regarding the company’s future. Obviously, all these elements do not influence the business valuation, but they can have an impact when it comes to determining its price,’ Stéphane Rouvez adds.
There are three types of business valuation methods.
"}},{"componentType":"paragraph","richBody":{"value":"While this method is considered to be the most comprehensive, it requires a great deal of preparation,’ Stéphane Rouvez cautions. It is used to estimate the current value of a company, based on expected future cash flows according to the business plan. This means you need to draw up a solid, long-term business plan spanning 3 to 5 years, with a focus on very long-term growth.
This involves determining the company’s future investment needs, assessing working capital management, estimating profit growth, and so on. This can be done with the company’s accountant or auditor, or with a specialist external consultant.
‘It is a very labour-intensive process, especially for SMEs that aren’t necessarily used to this, but it’s the cornerstone of any reliable valuation,’ say our interviewees.
They also add a word of caution: don’t overestimate future cash flows. To determine the value of the shares, the financial debt must be deducted, or it must be increased with the cash available in the company.
"},"title":"Discounted cash flow: the most accurate method"},{"alignedImage":{"position":"bottom","extension":"jpg","original":"https://assets.ing.com/m/3da12f88acee8d79/original/Combinaisons-secteurs-tailles.jpg","transformBaseUrl":"https://assets.ing.com/transform/a82b5f42-e713-466c-8a99-c3f434258aa8/Combinaisons-secteurs-tailles"},"componentType":"paragraph","richBody":{"value":"The advantage of this method is its simplicity. Simply put, it consists of comparing your company with other companies listed on the stock exchange or with the prices obtained for companies that have been sold in your industry. (see table in FR)
The idea is that similar companies sell at comparable prices.
‘This method may be less scientific than the first option, but the results are excellent. Buyers often prefer it and it is widely used by SMEs,’ says Stéphane Rouvez.
"},"title":"Valuation multiples: simplicity first"},{"alignedImage":{"position":"bottom","extension":"jpg","original":"https://assets.ing.com/m/561e220f7e1be45d/original/EV-EBITDA-par-secteur.jpg","transformBaseUrl":"https://assets.ing.com/transform/93d6c09d-fecf-4e60-a077-0687addeb30c/EV-EBITDA-par-secteur"},"componentType":"paragraph","richBody":{"value":"
However, he also adds, ‘Do not compare apples with pears'. The listed companies provided as examples in the databases are often significantly larger than Belgian family-owned SMEs. If the valuation is based on multiples of EBIT or EBITDA, you may need to apply a discount with respect to the valuations obtained by the companies in your comparison.
A discount may also be required in the case of similar unlisted companies, for which the sale price is known. The size of the transaction (total or partial transfer) and the timing (economy, market outlook, etc.) may have an impact.
The valuation also depends on growth prospects, and multiples can vary widely from one industry to another.
"},"title":"A word of warning"},{"componentType":"paragraph","richBody":{"value":"
The first two methods are less suited to some companies, such as holding companies, property trusts, or companies that are not very profitable or are even incurring a loss.
The question arises what their replacement cost would be. The adjusted net asset method adjusts a company’s assets and liabilities to reflect fair market value. It takes into account the economic value of assets and liabilities, as well as unrealised gains or losses.
‘This essentially means valuing the company’s equity, which is relatively simple,’ says Stéphane Rouvez.
"},"title":"Adjusted net asset method: for special cases"},{"componentType":"sectionTitle","title":"Other factors that can affect valuation"},{"componentType":"paragraph","richBody":{"value":"Our interviewees also emphasised that three additional factors may influence a business valuation.
Strategic value: a company may have strategic value for the buyer. A competitor might see this as an opportunity to generate synergies, which would be difficult for the vendor to quantify.
Sale to a family member: sellers often happily settle for a lower price, especially when selling to one of their own children. Although this is perfectly understandable, the company owners must always ensure that this is not at the detriment of children who are not parties to the sale.
Remuneration of the entrepreneur/shareholder: in a family-owned SME, the entrepreneur/shareholder will sometimes settle for a low salary, choosing to be remunerated in other ways (with dividends, for example). In that case, the buyer of the company will be required to expand the management team and increase management salaries. This aspect needs to be taken into account in the valuation, as this may negatively impact profitability in the first few years.
"}},{"componentType":"sectionTitle","title":"Would you like to find out more?"},{"componentType":"paragraph","richBody":{"value":"Our Relationship Managers, Private Bankers, and Wealth Planners are your first point of contact for discussing this.
"}},{"cards":[{"cardSize":"small","cardType":"service","componentType":"serviceCard","image":{"extension":"png","original":"https://assets.ing.com/m/6e6f3de4c512a23f/original/Fingerprint-phone-hand-spot.png","transformBaseUrl":"https://assets.ing.com/transform/4c8f79aa-f653-430e-bd15-7a94e7640b59/Fingerprint-phone-hand-spot","type":"image","width":615},"intro":"Contact your Private Banker via the ING Banking app!","link":{"url":"/en/private-banking/contact/contact-us-private-banking"},"title":"Already an ING Private Banking client?"},{"cardSize":"small","cardType":"service","componentType":"serviceCard","image":{"extension":"png","original":"https://assets.ing.com/m/7e02e75f5d5f534d/original/icon-Video-call-woman-spot.png","transformBaseUrl":"https://assets.ing.com/transform/67010ed0-a27d-4c66-b37c-a6bfb9a308c2/icon-Video-call-woman-spot","type":"image","width":847},"intro":"Leave us your details and we will get back to you!","link":{"url":"https://www.ing.be/en/individuals/services/contact-us-appointment?journey=invper&flow-step=call-me-back"},"title":"Want to find out more about Private Banking?"},{"cardSize":"small","cardType":"service","componentType":"serviceCard","image":{"extension":"svg","original":"https://assets.ing.com/m/42ebb9a214caa287/original/phone.svg","transformBaseUrl":"https://assets.ing.com/transform/07e87ec5-eb62-4d76-a006-e21b950e16b6/phone","type":"image","width":160},"intro":"Find the right contact option","link":{"url":"/en/business/services/contact-us"},"title":"Contact us"}],"componentType":"cards"}]},"hasMacro":false,"id":"f7203925-ab63-4335-b442-6c1c9cd83d1d","localeString":"en-GB","mainHeaderZone":{"backLink":{"textLink":{"text":"Our integrated expertise for entrepreneurs","url":"/en/private-banking/family-business"}},"componentType":"editorialHeader","coreHeader":{"headerImage":{"extension":"png","original":"https://assets.ing.com/m/76c8709db5660f55/original/2-Meerwaarden-belastbaar.png","transformBaseUrl":"https://assets.ing.com/transform/84ab1e2e-a724-46e1-9f2e-436806196a3f/2-Meerwaarden-belastbaar","type":"image","width":540},"title":"How do you value a business before selling it?"},"date":"2025-01-08","readingTime":5},"publishDate":"2025-09-11T16:36:56.674+02:00"}}