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Navigating the Complex Terrain of Business Valuation: A German Perspective


The process of valuating a business enterprise or its shares is a critical step in various business transactions. In Germany, the debate over the appropriate valuation method has evolved over the years, leading to the decline of traditional methods like the "Stuttgart Procedure." This blog post delves into the intricacies of business valuation, shedding light on the evolution of valuation methods, focusing on the productive value of a business enterprise, and providing guidelines for a comprehensive valuation process.

Evolution of Valuation Methods

Historically, the "Stuttgart Procedure" was widely used, emphasizing tangible assets and post-World War II economic considerations. However, its limitations in providing accurate valuations led to the development of practical procedures, with the Institution of Certified Public Accountants playing a crucial role in establishing the premise that a business's productive value is determined by its future withdrawable profits.

Productive Value of the Business Enterprise

Appraising the productive value involves addressing several challenges and principles:

1️⃣ Cash Value of Future Net Profits: The theoretical value is the surplus earnings that can be permanently withdrawn without harming production value. However, legal restrictions on profit distribution require additional assumptions about future profit-distribution performance.

2️⃣ Time Placement of Future Yields: Properly assigning future yields to anticipated periods is crucial, considering the diminishing accuracy of projections over time.

3️⃣ Accuracy of Predictions: Due to the uncertainty of expected profit flow, weighing the probability of each projection is necessary.

4️⃣ Deducting Possible Interest: Future distributable profits must factor in the potential interest that could have accrued if funds were invested differently.

5️⃣ Total Function Valuation: Considering the total function of the business enterprise is essential, especially for mixed and affiliated enterprises in Germany.

6️⃣ Empirical Values: Adjusting total value based on empirical values, such as common net worth in the industry, can compensate for low net worth.

7️⃣ Future Measures and Alterations: Generally, future measures by the purchaser are not considered in the valuation, unless initiated and implemented.

8️⃣ Past Analysis for Future Earning Capacity: Purifying past results and analyzing past development help predict future turnover, depreciation, and interest burden.

9️⃣ Tangible Value: Tangible value serves as an intermediate value in the business transformation process, aiding in investment planning and determining operating capital.

🔟Personnel-related Value Factors: The role of personnel-related factors, such as management qualifications, is considered, though their inclusion in computed business appraisals remains debatable.

Guidelines for Determining Productive Value

The purification of past values involves eliminating non-essential operational assets and making necessary modifications, such as adjusting for repurchasing costs and extraordinary influencing factors. The analysis of earning capacity requires creating a quantity framework based on purified past results, including predictions of sales, investment plans, financing needs, and tax expenditures.


Navigating the complexities of business valuation requires a nuanced understanding of the evolution of valuation methods, the importance of the productive value of a business enterprise, and adherence to comprehensive guidelines. Whether for tax purposes or business transactions, a well-informed and meticulous approach to business valuation is essential for making informed decisions in the dynamic landscape of business enterprises.

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