An independent corporate share valuation from Butt Miller establishes the fair value of your shares, giving you confidence in the business decisions ahead.
If you own shares in a private company, there are times when you need a clear idea of what they’re worth, usually ahead of something significant like a corporate restructure, a shareholder exit, a management buyout or a business sale.
Butt Miller provides independent valuations for financial reporting, tax compliance and strategic decision-making. You can rely on our extensive experience to deliver fair, accurate and well-supported reports that stand up to scrutiny.
Unlike shares in listed companies, unquoted shares are not traded on a public stock market, so an independent valuation is needed to establish fair value or market value.
A well-supported share valuation can help to:
- Set fair and reasonable share prices for buyers, sellers and other stakeholders
- Calculate tax liabilities and support HMRC compliance
- Provide a sound basis for negotiations in a share transaction or dispute
- Support legal, financial reporting and strategic decisions
Share valuations are often required for legal, tax, financial or strategic reasons. At Butt Miller, we’re experienced in preparing valuations across a wide range of common scenarios.
Most private company share transactions, including a sale, transfer or new share issue, rely on a supportable valuation. It gives buyers, sellers and shareholders confidence that the price is fair, with evidence and reasoning behind it, plus a solid position to return to if it’s ever questioned.
Employee Ownership Trusts (EOTs)
An Employee Ownership Trust can be a good option for business owners who want to sell a controlling interest in the company while protecting its future and rewarding the employees who helped build it. The trust acquires more than 50% of the company and holds the shares for the benefit of all eligible employees.
Before the transaction goes ahead, the shares must be valued carefully. The supporting valuation should show why the proposed price is commercially justifiable, which is important for the trustees, the selling shareholders and HMRC.
See how Butt Miller helped a logistics company set up an EOT.
Succession and exit planning
A valuation can give business owners clearer direction on succession routes before making a commitment. This might involve passing shares to family members, bringing management into ownership, preparing for retirement, selling part of the business or considering an EOT.
If the preferred route is a management buyout, family handover or third party sale, understanding the value early can also help with funding, negotiations and tax planning, including the potential Capital Gains Tax position.
Corporate restructuring
Corporate restructuring can change share ownership, the company’s capital, the group structure or the way assets and value are held. A valuation may therefore be needed before any transaction goes ahead.
We provide valuations to support group reorganisations, share-for-share exchanges, holding company structures and asset protection planning, as well as restructuring ahead of investment, succession or a future sale.
An independent valuation provides a credible starting point for negotiations if a shareholder is leaving, your management team is buying in, or ownership is moving between directors, family or employees.
Company sales, mergers and acquisitions
A share valuation can support the early stages of a company sale, merger or acquisition by giving the owners or directors a view of the business and shares before negotiations begin.
This can inform pricing, transaction planning, funding discussions, due diligence and the tax implications of a business sale or third party sale.
Employee share schemes and share option arrangements often require a valuation for tax, reporting or HMRC purposes. Establishing the appropriate value at the outset can help the company structure the scheme properly and avoid unexpected tax charges for the business and employees.
Tax planning, estate planning and probate
A share valuation may be needed when calculating Capital Gains Tax or Inheritance Tax, transferring ownership, planning an estate or administering probate after a shareholder has died.
HMRC withdrew its informal advance valuation check service for certain purposes in 2016, so the methodology, assumptions and supporting evidence need to be clearly documented from the outset.
In shareholder disputes, divorce proceedings or other legal settlements, the parties may have very different views of what the shares are worth. An independent valuation can provide an evidence-based position for negotiations and prevent decisions being driven by assumption.
Private company shares are assessed using the company’s financial information, ownership rights and commercial position. The purpose of the valuation can also influence the basis used, such as market value or fair value.
The value itself may be influenced by:
- Historic financial performance and expected future earnings
- Assets, liabilities and working capital
- The strength of the balance sheet
- Growth prospects, sector conditions and business risk
- Intellectual property and other intangible assets
- The size of the shareholding and the voting power attached to it
- Different share classes, including preference shares
- The rights and restrictions set out in the shareholders’ agreement
These factors don’t carry the same weight in every valuation. A minority holding with limited voting rights, for example, may be valued differently from a controlling interest in the same company.
Depending on the company and the purpose of the valuation, we may use one or more recognised valuation methods:
- Market approach: comparing the business with comparable companies, relevant market multiples or recent transactions.
- Income approach: assessing maintainable earnings or expected cash flows using an earnings basis, dividends basis or discounted cash flow model (DCF). DCF calculates the present value of the business’s expected future cash flows, adjusted for risk.
- Asset-based approach: considering the value of the company’s underlying assets and liabilities, commonly using a net assets basis.
More than one method may be required, particularly if the company has several share classes or a complex ownership structure.
Every valuation assignment has its own purpose, facts and constraints. So we pin those down early, then give you a report that’s clear, supportable and actually useful when you come to make decisions.
1. The purpose of the valuation
We begin by exploring why the valuation is needed, which determines the valuation methodology and the information required.
2. Review of financial information
We review the relevant financial statements, management accounts, forecasts and business plans, together with details of the company’s assets, liabilities, funding and any proposed transaction.
3. Review of company structure
We consider the share classes, ownership arrangements, group and holding companies, shareholders’ agreement, partnership agreements and any rights or restrictions that could affect value.
4. Assessment of commercial context
We consider the wider commercial context so that the valuation reflects profitability, market conditions, future earnings, customer or supplier dependencies, growth prospects, risk, funding and the asset base.
5. Your valuation report
You’ll get a clear report, setting out the valuation, the methods used and the main assumptions. We’ll then talk you and any key stakeholders through the findings, including the tax, commercial or shareholder implications that need to be considered next.
As chartered accountants, we do more than hand you a figure. We look at the valuation alongside the wider financial position of the business, explain where the key assumptions, risks and sensitivities lie, and make sure you understand what the numbers mean for the decision in front of you.
We’ve prepared valuations for businesses of all sizes, covering tax planning, business sales, EOTs, employee share schemes, shareholder exits and legal matters. Whatever the reason for yours, you’ll get a clear, well-supported valuation and straight answers to your questions.
Frequently asked questions about share valuations
How long does the valuation process take?
The timeframe depends on the complexity of your company, the purpose of the valuation and how quickly we can access the required information. A straightforward valuation can take a few days, while one that involves several share classes, detailed forecasts or a complex transaction can take several weeks.
The documents we need vary, but commonly include statutory accounts, recent management accounts, forecasts, business plans, details of assets and liabilities, the shareholders’ agreement, share rights and information about any proposed transaction.
Private company share valuations can be relevant and helpful to businesses of all sizes, including small and early-stage businesses. The need is usually driven by the proposed transaction, tax position or ownership change rather than turnover alone.
A share valuation is a key part of an EOT transaction. It establishes a fair value for the shares being transferred and supports the trustees, tax planning and commercial reasoning behind the sale.
A share valuation helps owners compare different routes for succession planning, whether that’s an EOT, management buyout, family succession or third party sale. It highlights the likely proceeds, funding requirements and tax implications of each route.
It may be required where shares are being transferred, ownership is changing or a new group structure is being created. The valuation can support the commercial reasoning, tax treatment and documentation for the restructure.
Butt Miller is experienced in preparing independent valuations for tax planning, employee share schemes, EOTs, probate and other HMRC-related purposes. We’ll explain the evidence required and the basis on which the value has been calculated.
A business valuation assesses the value of the company or enterprise as a whole. A share valuation considers the value of a particular holding, taking account of its percentage ownership, share class, rights, restrictions and voting power.
When you know what your shares are really worth, you can plan, negotiate and make decisions from a position of strength rather than guesswork. If you need an independent corporate share valuation, whether for an EOT, a shareholder exit, a succession plan, a restructure, a tax matter or a business sale, we’re happy to help. We’ll explain what information is needed, how the process works and how the valuation can support your next decision.
