How Swiss professional businesses are valued
The methods most often applied to owner-managed Swiss firms, why normalised EBITDA matters, and what typically moves a multiple up or down.
7 min
Value is a range, not a number
Any credible valuation of an owner-managed business produces a range and a set of assumptions, not a single figure. The purpose is to give both sides a defensible starting point and to make explicit what each party is really disagreeing about — usually the sustainability of earnings after the owner leaves.
A valuation is also not a price. The price is what a specific buyer, with specific financing and specific plans for the business, is willing and able to pay.
Normalised earnings come first
Almost every method rests on adjusted earnings. Typical adjustments: bringing owner compensation to a market salary for the role, removing private expenses, stripping out one-off gains and losses, correcting related-party rent, and reflecting the cost of any function the owner performs for free.
Getting this right matters more than the choice of method. A CHF 100,000 difference in normalised EBITDA moves the outcome far more than a modest change in the multiple applied to it.
Methods in common use
Three approaches dominate in practice. Earnings multiples apply a multiple to normalised EBITDA or EBIT, adjusted for net debt. Discounted cash flow models the business's future free cash flow and is more suited to firms with a credible multi-year plan. The Swiss practitioner method (Praktikermethode) combines net asset value with capitalised earnings, weighting earnings twice, and is still widely used in tax and family contexts.
Asset-based approaches remain relevant where the balance sheet, rather than the client base, carries the value — for example a firm holding real estate or substantial equipment.
What moves the multiple
Upward: recurring or contracted revenue, a diversified client base, a management team that stays, documented processes, regulatory licences that transfer cleanly, and consistent margins over several years.
Downward: concentration in one or two clients, revenue tied to the departing owner's personal reputation, unresolved legal or tax exposure, deferred investment, and earnings that fluctuate without a clear explanation.
Structure interacts with price
The headline figure and the structure cannot be judged separately. A higher price paid over four years with an earn-out tied to client retention can be worth less in present value than a lower figure paid at closing.
Vendor financing, staged share transfers and retention clauses are common in Swiss succession precisely because they bridge a gap in perceived risk rather than in perceived value.
General information for orientation only. It is not tax, legal or financial advice; obtain qualified Swiss advice for your situation.