Understanding value
Business valuation by Fischer | Konrad
Drawing on Dr. Konrad's many years of valuation work as a court-appointed expert and valuer, Fischer | Konrad in Münster has developed a modular four-level reporting model. The base level – the value analysis – provides a cost-efficient way to identify the right depth of report, with the purpose of the valuation and the value at risk firmly in view. Via the value calculation and the value opinion, the work can be extended seamlessly, without methodological break, up to a full report under IDW S1.
Our valuations follow IDW S 1 and stand up to scrutiny – by tax authorities, courts and transaction counterparties. The modular structure means you only commission the depth your situation requires.
Dr. Konrad is a publicly appointed and sworn expert for business valuation and is happy to walk you through the details and the merits of our approach in a personal conversation.
How we work
A modular reporting approach, extendable without break
Fischer | Konrad closes the gap between the simplified statutory income-value method in common use and a full business valuation under IDW S1. Our solution consists of a value analysis and a set of optional modules that integrate seamlessly with it. By partly standardising the working steps and by working modularly, we make it possible to determine the value of a business in a way that is cost-transparent, proportionate to the purpose, and adapted to your specific requirements. You get to benefit from a method that is, in theory, of the highest standard, while we keep a sound balance between effort and value firmly in view.
The modular approach at Fischer | Konrad is in principle suitable for every valuation purpose: by using the discounted-cashflow method, every level follows the methodological and computational principles of business valuation under the IDW S1 standard. Unlike the simplified income-value method codified in the German Valuation Act, case-specific adjustments are possible without constraint.
When does it apply?
Use cases and references
Fischer | Konrad draws on more than 15 years of experience in business valuation. Use cases from our practice include tax matters before the tax office such as tax and field audits, breaches of holding periods or inheritances, the departure of a shareholder and the settlement payment to be determined, court disputes, family-law matters (e.g. divorces), restructurings, succession transfers and moderation engagements:
Why does it matter?
Strengths and limitations of the common methods
The rocky preferred route: a valuation report under IDW S1
Business valuation is widely regarded as the supreme discipline of business administration: every sub-discipline converges on a single number – the enterprise value. A valuation following the discounted cashflow (DCF) method or the income-value method requires not only a deep understanding of financial metrics such as gross margin and profit, but also of the underlying commercial reality: customer-side sales potential, available human, physical and intangible resources, supply chains and business processes. Only against this background can the financial projection required for the valuation be derived reliably. In addition, date-specific capital-market analyses are normally needed to ensure a risk-adequate valuation through a peer-group analysis. The quality requirements under the prevailing standards of the IDW or the EACVA are exceptionally high. The corresponding effort is, for the client, often opaque.
The simplified income-value method: the easy statutory answer?
Because the effort of producing a full report is often disproportionate to the purpose or the object of valuation, the German Valuation Act (BewG) allows, in certain circumstances, the determination of fair value under §9 BewG using the so-called simplified income-value method (§§199 ff. BewG). This is a specific form of the income-value method that replaces the financial projection with the three financial statements preceding the valuation date. Under the Act, operating profit is normalised for selected income and expense items (§202 BewG). The risk parameter to apply in calculating the income value is set uniformly by the Act for businesses across all industries (§203 BewG).
Because of these heavy simplifications, the resulting enterprise value can be significantly distorted. That can lead to unnoticed valuation errors and to adverse outcomes, for example in tax matters.
Multiples: complexity reduced to rules of thumb
To simplify the valuation, in practice – particularly in business acquisitions and sales (M&A) – one often encounters so-called multiples. Here, market value is derived by applying a multiplier – the multiple – to a company-specific metric, frequently revenue or operating profit (EBIT or EBITDA). Multiples are usually derived per industry, either from comparable data or from expert estimates.
Multiples are often problematic in that they rest on a relatively narrow data base. Even industry-specific multiples can therefore lead to material value distortions. With only a weak methodological link to the specific business and to its value drivers, this approach remains problematic, particularly in the SME segment. Beyond that, in tax or court matters multiples are normally used only as a plausibility cross-check on the enterprise value.
Method comparison
The overview below sets the common valuation methods alongside one another and shows, in compact form, where their respective strengths and weaknesses lie.
Simplified income-value method
Strengths
- +Simple, statutory methodology
- +Cost-efficient
- +Generally accepted for tax-related valuations, unless ‘evidently inappropriate’
Limitations
- –Value distortions from a backward-looking input
- –Value drivers remain hidden
- –Limited acceptance among practitioners
- –Cannot be extended into a full report
Multiples method
Strengths
- +Widely used and accepted by practitioners
- +Easy-to-grasp marketplace logic
- +Cost-efficient
Limitations
- –Only weak methodological link to the specific business
- –Value distortions from a backward-looking input
- –Simplicity can invite methodological errors
- –Cannot be extended into a full report
- –Value drivers remain hidden
DCF / income-value method
Strengths
- +Wide acceptance, particularly in court or tax matters
- +Identifies value drivers – basis for substantive value discussions
- +Maximum link to the specific business
- +Forward-looking
Limitations
- –Time- and cost-intensive
- –Requires deep business-management expertise
Valuation methodology between complexity and rule of thumb
In business valuation, low-cost methods such as the simplified income-value method or the multiples approach sit in tension with the elaborate standards that constitute the preferred route in court and tax matters. The simplified income-value method can quickly produce evidently inappropriate results and is barely extensible into a full valuation. The multiples-based approach is attractive for its widespread use in M&A and its intuitive marketplace logic, but it is typically not defensible in court or tax matters because its link to the specific business and its value drivers is generally too weak. On the other side stand methods aligned with the prevailing valuation standards (e.g. IDW S1), where the quality requirements may at times be out of proportion to the purpose or the available budget.
Level 1 – Value analysis
The base level: solid results at a fixed budget
Already at the value-analysis level – and unlike the income-value method codified in the German Valuation Act – our approach meets, in theory, the highest standards of forward-looking value determination under IDW S1, so that the result withstands professional scrutiny. The financial projection required by the method (to derive future cashflows) is initially produced on a standardised basis from the company’s historical data. In the base variant, clients receive a detailed report on the enterprise value, including a historical balance-sheet analysis, the projection, the valuation methods applied, and extensive sensitivity analyses around the derived value.
You provide
Straightforward prerequisites
- Annual trial balances (SuSa) for five years under Datev SKR03 or SKR04 in Excel format
- Annual financial statements with account schedule in PDF format
- Your tax advisor will usually provide these without difficulty.
You receive
Comprehensive deliverables
- A standardised financial projection derived from historical averages
- A business valuation in line with the technical requirements of IDW S1, including:
- – Discounted cashflow (DCF) method in all common forms – Adjusted Present Value (APV), Flow to Equity (FtE) and Weighted Average Cost of Capital (WACC)
- – Determination of the risk-free base rate under IDW S1 (Svensson method) – daily base-rate calculator
- – Periodic re-levering with equity beta (roll-back, Harris-Pringle and Fernandez formula)
- – Consideration of a debt beta
- A detailed report on the calculated enterprise value, including the historical balance-sheet analysis, the standardised projection and detailed sensitivity analyses.
The staged model
From a value analysis to a full report under IDW S 1 (2026 edition)
Four levels, one consistent methodological framework: each level builds on the previous one, and each can be carried forward into the next without methodological break. The terms value calculation, value opinion and valuation report come directly from the reporting forms in IDW S 1 (2026 edition) and correspond to the valuer’s defined roles: value calculation in an advisory role, value opinion in the role of neutral expert, valuation report in the role of neutral valuer. Which level is right for a given mandate depends on the purpose of the valuation – court, tax, family-law, transaction-preparation or internal – and on the proportionate effort.
Level 1
Value analysis
A valuation following IDW S1 methodology, based on a standardised financial projection derived from historical data. Classical discounted-cashflow methods (APV, FtE, WACC), the risk-free base rate under the Svensson method, beta simplified from industry-comparable data. A detailed report including historical balance-sheet analysis and sensitivity analyses – the make-up is described in detail above under “The base level”.
Well suited to
- Stable business models where the past is a reliable guide to the future
- Initial analysis on the question "what depth of report do we really need for our purpose?"
- Internal value indications without an external audience
Level 2
Value calculation
The value analysis plus a simple, forward-looking financial projection. We either take an existing in-house projection and review it numerically, or we work with management in a planning workshop to build a lean projection. Management’s assumptions form the basis and are transferred methodically into the valuation model – a lean, cost-efficient path to a robust value indication. Where the chart of accounts is not Datev SKR03 or SKR04, the semi-automatic mapping is replaced by a manual data integration into the valuation model.
Well suited to
- Low- to medium-value cases and disputes
- Internal use where forward-looking analysis is required
- Valuations with foreseeable developments not yet visible in the historical data
Level 3
Value opinion
The value calculation plus a sufficient plausibility assessment of the key planning assumptions – under IDW S 1 (2026 edition) the defining feature of the value opinion as a valuation in the role of a neutral expert – and external objectification via the capital market. Through detailed commercial analysis, selected balance-sheet items (e.g. materials or personnel expense, working capital) are critically tested and rendered plausible. Where useful, project-cost or contribution-margin analyses based on GoBD or ERP data are added. The cost-of-capital analysis covers the derivation of capital costs using the industry-standard Capital Asset Pricing Model (CAPM), with a listed peer group and a date-specific beta derivation. The resulting enterprise value is finally placed and cross-checked against market and expert multiples.
Well suited to
- Family-law matters (divorces, inheritance disputes) – where relevant, taking into account the specifics of IDW S13 (notional capital-gains tax, tax amortisation benefit)
- Matters that call for a contained internal and external plausibility check
Level 4
Customised valuation report under IDW S1
The full valuation report under IDW S 1 (2026 edition). In the role of a neutral valuer, a full plausibility assessment of the key assumptions, the planning model and the resulting enterprise value is carried out. The customised report can incorporate every module of the previous levels and, where appropriate, go further still – for example with an analysis of planning accuracy over the historical observation period, where the company’s own historical projections are available. It fully meets the requirements of a business-valuation report under IDW S 1 (2026 edition) and is qualitatively well beyond the income-value method described in the German Valuation Act.
Well suited to
- Court disputes, squeeze-outs and corporate proceedings
- Tax valuations – gifts, inheritance, breaches of holding periods, tax audits
- Every valuation purpose where the full IDW S1 standard is required
Individual services
All modules to mix and match
The four levels are the usual packages – but the underlying modules can also be commissioned individually or combined à la carte with any level. The only prerequisite is the value analysis as a base. Beyond that, the following modules extend the scope of the report on a case-by-case basis.
Level 2
Chart of accounts
If the subject of the valuation uses a chart of accounts other than Datev SKR03 or SKR04, the semi-automatic mapping is replaced by a manual data integration into the valuation model. A manual mapping is usually possible with little additional effort.
Level 2
Planning workshop
To incorporate a tailored projection, we offer a planning workshop. We normalise the historical results, adapt the projection to the specific characteristics of the business and derive the cashflows relevant to the valuation.
Level 3
Cost-of-capital analysis
The cost-of-capital analysis covers the derivation of capital costs using the industry-standard Capital Asset Pricing Model (CAPM). It includes the identification of a listed peer group and the derivation of the beta factor.
Level 3
Multiples
The derived enterprise value can be cross-checked against market and expert multiples – for instance, market multiples drawn from actual sales in practice, or from expert estimates for a given industry.
Level 3
Detailed commercial analyses
Detailed commercial analyses examine, for example, individual balance-sheet items or build a contribution-margin analysis based on GoBD and/or ERP data. These analyses increase the robustness of the projection underlying the valuation.
Additional service
Market analyses
Market analyses look at environmental factors that may influence a company’s economic development (e.g. market size and growth, competitive position, value chain – where useful supported by expert interviews and market databases) and reflect the implications in the valuation.
Additional service
Group analyses
On request, we value not only a single company but also entire group structures or combinations of companies as an economic unit, including any consolidations required.
Additional service · IDW S13
Family- and inheritance-law matters
Valuations for family- or inheritance-law purposes require, under IDW S13, the consideration of certain technical specifics. For example, the inclusion of a value-decreasing notional capital-gains tax or a value-increasing tax amortisation benefit can be appropriate.
Additional service
Liquidation-value determination
The liquidation value can be relevant as a floor for the enterprise value. In determining it, the value is calculated on the assumption that the individual assets and liabilities of the business are sold individually or in groups. The sale is modelled hypothetically with optimal use of realistically achievable market prices, while value discounts are also taken into account.
Additional service
Scenario analysis & Monte Carlo simulation
In certain cases, analysing different planning scenarios is useful for determining the enterprise value. Where appropriate, a Monte Carlo simulation can derive probability distributions for the enterprise value.
Frequently asked questions