Valuing your business in Switzerland: methods and multiples 2025

Why value your business before selling it?

Knowing the value of your business is not just a simple administrative formality. It is a strategic prerequisite that determines the success of your succession.

Firstly, a solid valuation gives you a credible negotiating position. When facing a potential buyer, you will be able to justify your sale price with quantified arguments and recognised methods. Without this objective basis, you risk finding yourself in a weak position during discussions.

Secondly, it allows you to avoid undervaluation. Many entrepreneurs, through lack of knowledge of valuation methods or due to urgency, sell their business well below its real value. A mistake that can represent hundreds of thousands of francs in lost earnings.

Thirdly, the valuation process forces you to prepare your financial documents and put your accounts in order. This preparation will in any case be required by serious buyers and their advisers during due diligence.

Finally, understanding what creates value in your business allows you to identify the improvement levers to activate before the sale. You will thus be able to maximise the sale price by working on the weaknesses identified.

To understand the entire transfer process, consult our complete guide on how to sell your business in Switzerland. And to avoid common pitfalls, discover the 7 most common mistakes when selling an SME.

The 3 main valuation methods in Switzerland

The valuation of a Swiss SME is not based on a single formula. Professionals generally use three complementary approaches, each adapted to specific situations.

The Swiss practitioners' method is the most widely used for traditional SMEs. It combines asset value (substance) and earning capacity (earnings) according to a 1/3 - 2/3 weighting. This balanced approach reflects well the reality of Swiss family businesses.

The DCF (Discounted Cash Flow) method favours a forward-looking vision by discounting future cash flows. More sophisticated, it is particularly suitable for growing companies with a stable financial history and reliable projections.

The multiples method, particularly the EBITDA multiple, compares your business to similar recent transactions. Simple and quick, it is widely used by investors and M&A advisers to obtain an initial market estimate.

The choice of method depends on several factors: the size of the business, its sector of activity, its maturity, the quality of its financial history and the purpose of the valuation. In practice, experts often combine these three approaches to obtain a valuation range rather than a single figure.

Let us now examine each of these methods in detail with concrete examples.

The Swiss practitioners' method (weighted average value)

The practitioners' method is the historical reference in Switzerland for valuing SMEs. It was developed specifically for the Swiss context and remains today the most widely used by Swiss accountants and trustees.

The formula is as follows:

Value = (1/3 × Substance value) + (2/3 × Earnings value)

The substance value corresponds to the revalued net assets of the business. We start from the accounting equity, then adjust the value of assets (property, machinery, inventory) to their real market value. We then subtract liabilities, including necessary provisions. This value represents what the business would be worth if it were liquidated today.

The earnings value capitalises the normalised future profit of the business. We first calculate the average profit of the last 3 years, which we adjust to eliminate exceptional items (non-recurring charges or income). We then divide this normalised profit by a capitalisation rate (generally between 10% and 20% depending on risk).

Detailed concrete example:

Let us take a carpentry SME with the following data:

• Accounting equity: CHF 800,000

• Asset revaluation: + CHF 200,000 (undervalued property)

• Substance value: CHF 1,000,000

• Average normalised profit: CHF 180,000/year

• Capitalisation rate: 12% (stable business, low risk)

• Earnings value: CHF 180,000 / 0.12 = CHF 1,500,000

Final calculation:

Value = (1/3 × 1,000,000) + (2/3 × 1,500,000) = CHF 333,333 + CHF 1,000,000 = CHF 1,333,333

This method reflects well the Swiss philosophy: we value both the accumulated assets (important for family businesses) and the ability to generate future profits (essential for the buyer).

The DCF (Discounted Cash Flow) method

The DCF method adopts a resolutely forward-looking approach. It values the business based on the cash flows it will generate in the coming years, discounted to their present value.

The principle is simple: a franc received tomorrow is worth less than a franc received today. The DCF method therefore calculates the present value of all future cash flows (generally over 5 to 10 years) by applying a discount rate.

In Switzerland, the discount rate (WACC - Weighted Average Cost of Capital) typically ranges between 6% and 10% for SMEs, depending on the risk profile of the business and sector. This rate reflects the cost of capital and the risk perceived by investors.

Advantages of the DCF method:

• Precision for growing companies with reliable projections

• Takes into account necessary future investments

• Approach valued by professional investors and funds

• Allows evaluation of the impact of different strategic scenarios

Limitations of the DCF method:

• Technical complexity requiring financial expertise

• Very sensitive to growth assumptions and discount rate

• Difficult to apply for companies with irregular history

• Requires detailed and credible financial projections

When to use the DCF method?

This method is particularly relevant for:

• Technology or innovative companies in growth phase

• Companies with stable history and reliable projections

• Successions involving institutional investors

• Situations where significant investments are planned

For traditional Swiss SMEs with stable but modest cash flows, the practitioners' method often remains more appropriate and more easily accepted by the parties.

The multiples method (EBITDA, turnover)

The multiples method is the most intuitive and quickest to obtain an initial value estimate. It consists of applying a multiplier coefficient to a key financial indicator of your business.

The EBITDA multiple (Earnings Before Interest, Taxes, Depreciation and Amortisation) is the most widely used in Switzerland. EBITDA represents the operating result before financial charges, taxes and depreciation – an indicator of pure operational performance.

EBITDA multiple ranges by sector in Switzerland (2025):

• Industry and manufacturing: 4-6x EBITDA

• Professional services: 3-5x EBITDA

• Trade and distribution: 2-4x EBITDA

• Technology and software: 5-8x EBITDA

• Health and medical services: 5-7x EBITDA

• Construction and building: 3-5x EBITDA

• Hospitality and catering: 3-5x EBITDA

• Transport and logistics: 4-6x EBITDA

These ranges vary according to the size of the business, its profitability, its growth and its competitive position. The most successful companies can reach the top of the range, or even exceed it.

Calculation example:

Consider an IT services SME with an EBITDA of CHF 500,000. By applying a multiple of 6x (technology sector, good growth), we obtain:

Enterprise value = 500,000 × 6 = CHF 3,000,000

Caution: this value represents the enterprise value (Enterprise Value), not the equity value. Net debt must be subtracted to obtain the share value.

Advantages of the multiples method:

• Simplicity and speed of calculation

• Direct reflection of current market conditions

• Easily understandable by all stakeholders

• Allows relevant sector comparisons

Limitations:

• Requires recent comparable transactions

• Does not take into account the specificities of each business

• Multiples vary greatly according to market conditions

• Difficulty finding comparables for specialised niches

In practice, the multiples method is often used as validation of results obtained with other methods, allowing verification that the valuation is within a range consistent with the market.

Factors that influence the valuation of a Swiss SME

Beyond calculation methods, many qualitative and quantitative factors significantly impact the real value of your business. Understanding these levers allows you to identify areas for improvement before a succession.

1. Profitability and growth trajectory

A business with stable or increasing profitability is always worth more than a company with erratic results. Buyers seek visibility on future revenues. A track record of regular growth over 3-5 years is a major asset.

2. Dependence on the owner

This is often the weak point of Swiss SMEs. If you are the sole holder of client relationships, technical know-how or strategic decisions, the value of the business decreases considerably. An autonomous management structure increases valuation by 20% to 40%.

3. Quality and stability of the team

Competent, loyal employees under long-term contracts reassure buyers. A high turnover rate or vacant key positions are warning signals that weigh on valuation.

4. Customer diversification

A business whose top 3 clients represent more than 50% of turnover presents a concentration risk. Conversely, a diversified and recurring customer base increases value and facilitates bank financing.

5. Assets and intellectual property

Patents, registered trademarks, customer databases, proprietary software or protected know-how constitute valuable assets. Similarly, ownership of premises (rather than rental) strengthens the substance of the business.

6. Competitive position

A business that is a leader in its market, with solid entry barriers and sustainable competitive advantages, justifies higher valuation multiples. Differentiation is key.

7. Sector of activity and prospects

Growing sectors (technology, health, business services) benefit from higher valuations than mature or declining sectors. Market trends directly influence the multiples applied.

If you are wondering whether it is the right time to sell, consult our article on the 5 signs that show it is time to sell your business.

Practical case: valuation of a Swiss industrial SME

To concretely illustrate the application of the three methods, let us take the example of a fictitious industrial SME specialising in the manufacture of mechanical components.

Business profile:

• Sector: Manufacturing industry

• Staff: 15 employees

• Turnover: CHF 3,000,000

• EBITDA: CHF 450,000 (15% margin)

• Normalised net profit: CHF 250,000

• Accounting equity: CHF 1,200,000

• Asset revaluation: + CHF 300,000

• Net debt: CHF 200,000

Method 1: Practitioners' method

• Substance value = 1,200,000 + 300,000 = CHF 1,500,000

• Earnings value = 250,000 / 0.12 = CHF 2,083,333

• Value = (1/3 × 1,500,000) + (2/3 × 2,083,333) = CHF 1,888,889

Method 2: DCF (simplified)

By projecting cash flows over 5 years with 3% growth and an 8% WACC, then adding a terminal value, we obtain an enterprise value of approximately CHF 2,100,000.

Equity value = 2,100,000 - 200,000 (debt) = CHF 1,900,000

Method 3: EBITDA multiples

Sector multiple for industry: 4.5x (middle of 4-6x range)

• Enterprise value = 450,000 × 4.5 = CHF 2,025,000

• Equity value = 2,025,000 - 200,000 = CHF 1,825,000

Summary and valuation range:

• Practitioners' method: CHF 1,889,000

• DCF method: CHF 1,900,000

• Multiples method: CHF 1,825,000

Final range: CHF 1,800,000 - CHF 1,950,000

This convergence of the three methods strengthens the credibility of the valuation. In negotiation, the seller could announce a sale price of CHF 1,900,000, with a negotiation margin down to CHF 1,800,000. Serious buyers will recognise that this range is justified and documented.

Note that adjustments could be negotiated according to the results of due diligence, the payment structure (cash vs deferred) or the guarantees requested.

The specificities of valuation in Switzerland

The Swiss context presents several particularities that influence valuation methods and the expectations of stakeholders.

Economic and political stability

Switzerland benefits from a stable economic environment that is reflected in generally lower discount rates than elsewhere in Europe. This stability also justifies higher valuation multiples, particularly for well-established businesses.

Variable cantonal taxation

With 26 different cantonal tax systems, the location of the business significantly impacts its net profitability and therefore its valuation. A business located in a low-tax canton (Zug, Schwyz) can justify a higher valuation than an equivalent company in a high-tax canton.

Importance of substance for family SMEs

Swiss entrepreneurial culture traditionally places great importance on assets and financial solidity. This is why the practitioners' method, which incorporates substance value, remains the reference for Swiss family SMEs, unlike Anglo-Saxon countries which favour purely earnings-oriented approaches.

Accounting standards: Swiss GAAP RPC vs IFRS

Swiss SMEs generally use Swiss GAAP RPC (Recommendations relating to the presentation of accounts) or Swiss accounting law, whilst large companies apply IFRS standards. These differences in standards may require restatements during valuation, particularly for fixed assets and provisions.

Central role of accountants and trustees

In Switzerland, trustees and accountants play a role of trust in business successions. Their validation of a valuation brings significant credibility with banks and buyers. Their local and sector expertise is particularly valued.

Fragmented succession market

Unlike large European markets, the Swiss succession market remains relatively fragmented and discreet. Transactions are often made privately, with less transparency on the multiples actually paid. This makes the use of several valuation methods all the more important to validate the price.

Engaging an expert to value your business

Whilst valuation methods may seem accessible in theory, their rigorous application often requires the intervention of an experienced professional.

When to engage an expert?

• Transactions exceeding CHF 1,000,000: The financial stakes justify the investment in professional valuation

• Complex structures: Holdings, cross-shareholdings, significant property assets

• Conflicts or disputes: Separation of partners, contentious successions, divorces

• Bank financing: Banks often require valuation by an independent third party

• Tax optimisation: To structure the transaction in a tax-efficient manner

Types of valuation experts:

Trustees and fiduciaries: Specialists in valuation according to Swiss standards, they know perfectly the practitioners' method and local specificities. Recommended for traditional SMEs.

Accountants: Provide in-depth accounting and tax expertise, particularly useful for identifying necessary restatements and optimising transaction structure.

M&A advisers: Specialised in mergers and acquisitions, they bring detailed knowledge of market multiples and can support the entire transfer process.

Cost of professional valuation:

Fees vary according to the complexity of the business and the scope of the assignment:

• Simple valuation (SME < CHF 5M): CHF 3,000 - 8,000

• Standard valuation: CHF 8,000 - 15,000

• Complex valuation: CHF 15,000 - 30,000+

This cost may seem high, but it generally represents less than 1% of the transaction value and can save you much more by avoiding errors or optimising negotiation.

The Leez expert network

Leez collaborates with a network of qualified experts in valuation, trustees, lawyers and advisers specialising in business successions. These professionals know the specificities of the Swiss market and can support you at every stage.

Discover our network of expert partners to find the professional suited to your situation.

Mistakes to avoid during valuation

Even with the best intentions, many entrepreneurs make mistakes that distort the valuation of their business and complicate negotiation.

1. Emotional overvaluation

This is the most common mistake. After years of hard work, it is tempting to overestimate the value of your business. But buyers base themselves on objective criteria, not on your emotional attachment. An overvaluation of 30-40% scares away serious buyers and unnecessarily prolongs the sale process.

2. Forgetting to normalise results

Many SME owners optimise their results for tax purposes by passing personal expenses through the business (vehicle, travel, insurance). These items must be restated to obtain a normalised profit reflecting true operational performance. Forgetting these adjustments artificially undervalues the business.

3. Ignoring hidden liabilities

Insufficient provisions for doubtful debts, ongoing unprovided litigation, restoration obligations, customer guarantees: these latent liabilities will be discovered during due diligence and will negatively impact the final valuation.

4. Not considering market trends

Valuing a business based solely on history without taking into account market developments (digitalisation, new competitors, regulatory changes) leads to major disagreements with buyers who are looking to the future.

5. Using a single method

Limiting yourself to a single approach weakens your position. Buyers and their advisers will use several methods to validate the price. It is better to anticipate and present from the outset a valuation triangulated by several approaches.

6. Neglecting document preparation

Approximate accounting, missing contracts, disorganised customer data: these gaps create doubts about the reliability of your figures and can lower the price by 10-20%, or even cause the transaction to fail.

For a complete list of pitfalls to avoid during transfer, consult our guide on the 7 most common mistakes when selling an SME.

How to prepare your business to maximise its value

Valuation is not a fixed inevitability. With strategic preparation over 12 to 24 months, you can significantly increase the value of your business before succession.

Improve profitability 2-3 years before

Buyers analyse trends. Three consecutive years of profit growth are worth much more than a single exceptional year. Identify levers: margin optimisation, reduction of non-strategic costs, cessation of loss-making activities.

Reduce dependence on the owner

This is the most powerful lever. Start delegating progressively: appoint a sales director, formalise production processes, document technical know-how. A business that runs without you for 3 months is worth 30% more.

Formalise processes and procedures

Document your working methods, create operational manuals, standardise key processes. This formalisation reassures buyers and facilitates transition. It also demonstrates the maturity of your organisation.

Optimise financial structure

Reduce debt if possible, clean up the balance sheet (obsolete assets, irrecoverable debts), optimise working capital requirements. A healthy balance sheet facilitates bank financing for the buyer and increases your negotiating power.

Update key contracts

Renew important client contracts with long-term clauses, secure strategic supplier contracts, regularise employment contracts, update commercial leases. These contractual elements secure future revenues.

Prepare a structured data room

Anticipate due diligence by gathering all documents now: annual accounts for the last 5 years, important contracts, organisation chart, client/supplier list, intellectual property, regulatory compliance. A well-organised data room accelerates the process and inspires confidence.

Optimal timing: 12-24 months' anticipation

Successful successions are prepared well in advance. Ideally start 18 months before the target transfer date. This gives you time to implement improvements, demonstrate their impact on results and approach negotiation from a position of strength.

This methodical preparation can increase valuation by 20% to 40% compared to a rushed sale without preparation.

Would you like to know the value of your business?

Leez offers you a free and confidential valuation of your SME based on recognised methods in Switzerland. Obtain an initial estimate in a few minutes and access our network of experts for personalised support.

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