Business Valuations: Defensible Value for Transactions, Tax, and Disputes

Business valuation is the process of determining the economic value of a company or equity interest using recognised financial methodologies, producing a documented, defensible value range for use in transactions, tax filings, shareholder disputes, or strategic planning. In Spain, valuation methodology for tax purposes is governed by Article 18 of the Corporate Income Tax Act (LIS) for related-party transactions and Article 9 of the Inheritance and Gift Tax Act (ISD) for inherited or donated business interests, with the Spanish Tax Agency (AEAT) empowered to substitute declared values with its own assessment when submissions are insufficiently supported. The principal methodologies — discounted cash flow (DCF), comparable transaction multiples, listed company multiples, and adjusted net asset value — must be selected based on the purpose and characteristics of the business and comply with International Valuation Standards (IVS); for listed companies, the CNMV requires independent fairness opinions in related-party transactions and squeeze-out situations.

Our valuations comply with International Valuation Standards (IVS) and are accepted by courts, tax authorities, and leading financial institutions. Independence and methodological rigour are the foundations of every report we issue.

Why Poorly Substantiated Valuations Destroy Value in Transactions and Create Tax Contingencies

Business valuations fail when the methodology is not matched to purpose, the assumptions are not challenged rigorously, or the independence of the valuer is compromised. In M&A negotiations, a poorly substantiated valuation creates a weak anchor in pricing discussions — the counterparty’s adviser will find and exploit every weakness in the model. For tax filings involving related-party transactions, inherited business interests, or shareholder exits, a valuation that cannot withstand AEAT scrutiny generates a contingency that negates the transaction’s intended efficiency. The AEAT has the power to substitute the declared value with its own assessment — and does so when the submitted valuation is insufficiently documented. For shareholder disputes, a report that lacks the independence and procedural rigour required by Article 335 LEC is excluded as evidence. In each scenario, the cost of a weak valuation vastly exceeds the cost of a rigorous one.

Our Business Valuation Process: Methodology, Modelling, and Defensible Documentation

Every engagement begins with a conversation about purpose: the methodological choices for an M&A negotiation differ from those for a tax compliance filing, a shareholder dispute, or a management incentive scheme. We select and apply the methods best suited to the purpose, the sector, and the characteristics of the business. For most commercial companies, we build a discounted cash flow model, construct a comparable transaction multiples analysis, and reconcile the two approaches into a documented, defensible valuation range. For holding companies and real estate-heavy businesses, adjusted net asset value carries significant weight and requires individual fair-value assessment of each material asset. For intangible-heavy businesses — technology, IP, brands — we apply recognised methodologies including the relief-from-royalty and multi-period excess earnings methods. We document every assumption, every methodological choice, and every source — because the credibility of a valuation depends on the quality of the reasoning, not just the arithmetic. Our due diligence and transfer pricing specialists contribute where the valuation intersects with financial analysis or related-party pricing.

Real Results in Business Valuations: 350+ Reports, 100% Accepted by Courts and AEAT

• 350+ valuation reports issued across transactions, tax filings, disputes, and regulatory purposes.
• EUR 4B+ in aggregate business value assessed.
• 100% acceptance rate by the AEAT and Spanish courts: methodology, documentation, and independence meet the standards applied in any review.
• Second-opinion reviews of counterparty valuations that identify aggressive assumptions and unsupported methodological choices before they become the basis of a transaction price.
• Purchase price allocations (PPA) under IFRS 3 following acquisitions: allocation of acquisition price to identifiable assets, intangibles, and goodwill.

Business valuations in Spain for tax purposes must comply with the methods recognised under Article 18 LIS (transfer pricing) and Article 9 ISD (Inheritance and Gift Tax). The AEAT may substitute the declared value with its own assessment — capitalisation of profits or assets — when the submitted valuation is insufficiently documented. For M&A transactions, valuations must comply with IVS as market best practice. For listed companies, CNMV rules require Fairness Opinions in related-party transactions and squeeze-out situations. The integration of valuation with succession planning is particularly important for family businesses: the value used in a tax-efficient donation or inheritance must be defensible before the AEAT while also reflecting the genuine business value on which the family’s long-term financial planning rests.