While this valuation exercise generally prevails in an external sale, it is far less common in a family business transfer. Whether to save money or out of modesty, neglecting the valuation is a serious mistake. How often do we see tensions arise simply because the parties did not take the time to agree on an independent, rigorous, and figure-backed foundation?
Pitfalls to avoid
The proposed capital gains tax, which has already generated a great deal of debate (1), reinforces the need for a professional valuation because the tax targets only future capital gains. Indeed, the text of the government agreement explicitly provides that historical capital gains will be exempt.
For listed companies, a simple benchmark exists: the stock price at the time the measure comes into force. However, for unlisted companies, a starting valuation must be established.
This capital gains taxation is expected to take effect in early 2026. This means that financial results for this year (fiscal year 2025) will be decisive in establishing a clear reference point.
However, the way this valuation is carried out is far from trivial. While the precise terms for implementing this draft bill are not yet known, several pitfalls are already emerging:
Choice of method: the most common valuation method consists of applying a multiple to normalized EBITDA, adjusted for net financial debt. However, several questions arise: which EBITDA should be used? The latest fiscal year or an average of previous years? Which multiple should be applied? Moreover, certain situations do not suit this method. When profitability is low and significant assets are held (such as in a real estate holding company), adjusted net asset value should be used instead.
A rigid and theoretical implementation: a growing company is valued at a higher multiple, whereas a company in distress is often evaluated based on its liquidation value. Valuation must therefore account for the specific characteristics of the company and its sector.
The average-based approach: in judicial valuations, experts combine several methods and average them. This approach mitigates bias but does not eliminate it. The choice of methods, reference periods, and their weighting remain open to debate.
Anticipating to better prepare
Faced with these uncertainties, some are already anticipating a high risk of massive litigation against this tax. "The (valuation) exercise becomes unworkable, unless complex, convoluted formulas are devised—which will generate just as many disputes as transactions," noted Bruno Colmant (2).
Should business owners then wait and hope for a clarification of the legal framework? Quite the contrary. However imperfect it may be, valuation remains the bedrock of any business transfer. It allows shareholders to assess the true value of their company and anticipate tax impacts. Above all, it brings them closer to the final sale price, which constitutes an unquestionable benchmark for calculating capital gains.
Despite these tax uncertainties, a business owner considering a sale in the short or medium term has every interest in initiating a rigorous valuation right away and consulting experts to optimize their strategy and guide their decisions.
(1) Federal coalition agreement, dated January 31, 2025.
(2) Bruno Colmant, The capital gains tax? "It risks severely disrupting the economic fabric", La Libre, 23/02/2025.
Article originally published in La Libre Économique by Tanguy della Faille, Partner at Fondaris, on 10/03/2025. Published/updated version on the Fondaris website with the author’s permission.
