A valuation report is not a document that is read — it is a document that is defended. It is defended before the buyer in an M&A negotiation, before the judge in a shareholder dispute, before the AEAT in a transfer inspection, and before the heir who asks whether the price paid was fair. A report that is not prepared to withstand challenge serves none of those purposes.
At BMC we have issued more than 350 valuation reports over the past ten years, in contexts ranging from the sale of a family bakery to the expert appraisal of a business group with twelve entities and operations in three countries. In every case, the structure and rigour of the report determined its practical usefulness. This guide explains what a professional report contains, when you need one, how much it costs and how to distinguish sound work from work that is not.
6 Situations in Which You Need a Valuation Report
1. Business Sale (M&A)
This is the most common use. The valuation report is the document that justifies the price asked by the seller, that the buyer will use as the basis for their due diligence analysis, and that both parties’ advisers will use to anchor the negotiation. A report prepared before the process begins — not after an offer has been received — improves the seller’s negotiating position and reduces negotiation time. In our mergers and acquisitions mandates, the valuation report is always the first deliverable before the Information Memorandum is prepared.
2. Shareholder Dispute
When two shareholders cannot agree on the value of their shares — in a separation process, an exclusion for good cause or a company dissolution — the court may appoint an expert or each party may present their own appraisal. An expert valuation report prepared to be defended in judicial proceedings has more demanding methodological requirements than an internal management report: it must explain every assumption, cite the sources of data used, demonstrate consistency between methods and anticipate the objections of the opposing party. Shareholder conflicts rooted in business valuation are one of the contexts in which report rigour has the greatest direct economic impact.
3. Inheritance and Succession Planning
The transfer of family company shares to heirs can benefit from reductions of up to 95% in Inheritance and Gift Tax if the family business requirements are met (article 20.2.c LISD and regional legislation). To plan that reduction and, in particular, to defend it before the AEAT, you need a rigorous valuation that justifies the value declared in the deed of inheritance acceptance. The tax authority can challenge the declared value if it differs significantly from market value, and the burden of proof rests with the taxpayer.
4. New Shareholder or Investment Round
When a business angel, family office or private equity fund enters a company’s capital, the percentage acquired depends directly on the agreed pre-money valuation. An independent valuation report — prepared by a third party with no interest in the transaction — adds credibility to that valuation, reduces negotiation time and facilitates investors in completing their own due diligence. In rounds of €500K to €5M, a valuation report typically pays for itself in the first week of negotiation through friction reduction alone.
5. Financial Reporting: Impairment Testing (IAS 36)
Companies consolidating under IFRS (International Financial Reporting Standards) are required to perform impairment tests on their assets when there are indications that their carrying amount exceeds recoverable value. The impairment test under IAS 36 requires a formal valuation — typically via DCF — of the cash-generating units. Listed companies or those with international bank financing that do not perform these tests rigorously face observations in their audit and potential restatements of financial statements.
6. Tax Defence Before the AEAT
The Spanish Tax Agency can challenge the value declared in a share transfer if it considers it to be below market value. In that case, it can carry out a value assessment and increase the taxable base for Transfer Tax or Inheritance and Gift Tax. Having an independent valuation report prepared before the transfer — which methodologically justifies the declared value — is the best defence against that assessment. In transactions where the difference between declared and market value can generate a supplementary assessment of hundreds of thousands of euros, the cost of the report is marginal.
The 8 Sections of a Professional Report
A rigorous valuation report follows a standardised structure. Below we explain what each section contains and why it matters to the reader who will ultimately have to use the document.
Section 1: Purpose and Scope
This is the most important section of the report and, paradoxically, the one most neglected in superficial work. It must specify precisely: the purpose of the valuation (sale, litigation, tax planning), the valuation date, exactly what is being valued (100% of shares, a minority interest, a specific business unit), the standard of value used (market value, fair value, intrinsic value) and the limitations of the work (unaudited information, data provided by management without independent verification).
Limitations are not a sign of weakness in the report — they are a sign of professional honesty. A report that declares no limitations is a report that has no criteria.
Section 2: Company Description
History of the company, shareholding structure, management organisational chart, primary and secondary activities, competitive position in the market, principal customers and suppliers (without disclosing confidential third-party data), business model and revenue sources. This section contextualises all subsequent analyses: an external reader — a judge, an investor, an auditor — must be able to understand the business from this section alone, without requiring additional documentation.
Section 3: Financial Analysis
Analysis of financial statements for the past three to five years: income statement, balance sheet and — where available — cash flow statement. The analysis is not a reproduction of accounting data but its interpretation: is the gross margin stable or volatile? Why did EBITDA fall in 2024? What is the normalised debt level? Are there exceptional items distorting the picture?
This section also includes the calculation of adjusted EBITDA, with a detailed explanation of each adjustment applied. For a full description of the most common adjustments, see our table of EBITDA multiples by sector in Spain, where we explain the difference between accounting EBITDA and adjusted EBITDA with concrete examples.
Section 4: Sector Analysis and Comparables
Description of the sector in which the company operates: market size, growth rate, principal competitors, regulatory and technological trends. Followed by an analysis of comparable listed companies (where they exist in Spain or Europe) and precedent transactions in the same sector at similar size.
This section is what justifies the applied multiple. Without it, the multiple is an opinion; with it, it is a conclusion grounded in market data. A report that says “we have applied a 6x multiple” without explaining where that 6x comes from has no defensive value before any third party.
Section 5: Methodologies Applied
The quantitative core of the report. A rigorous report uses at least two methods and develops them in sufficient detail to be replicated:
DCF (Discounted Cash Flow): free cash flow projections for five years, justified growth assumptions, WACC calculation with decomposition of its components (risk-free rate, market risk premium, levered beta, illiquidity premium), terminal value calculation and reconciliation to Enterprise Value.
EBITDA Multiples: selection of the comparable sample, calculation of mean and median multiples, adjustment for differences in size, liquidity and specific risk, application to the company’s adjusted EBITDA.
Adjusted Net Asset Value (where applicable): inventory of assets at market value, adjustment of liabilities to fair value, calculation of adjusted NAV.
Each method must include detailed calculations, not just the result. A report that presents only conclusions without showing the intermediate numbers cannot be verified or challenged, which renders it useless in adversarial contexts.
Section 6: Reconciliation and Value Range
Each method produces a different result. This section brings them together and explains how the final value range is reached. Reconciliation is not an arithmetic average of the three methods — it is a professional judgement on the relative weight of each methodology given the type of business, the purpose of the report and the characteristics of the sector.
For a services company with minimal tangible assets, DCF and multiples carry more weight than adjusted net assets. For an industrial company with significant assets and low EBITDA, the adjusted net asset value may act as a floor for the range. This weighting must be explained, not left implicit.
Section 7: Sensitivity Analysis
This is the section that separates a quality report from a mediocre one. The sensitivity analysis shows how value changes if key assumptions vary: what happens if the growth rate is two points below the projection? What happens if WACC rises from 10% to 12%? What happens if the market multiple falls from 7x to 5.5x?
Typically presented as a dual-entry table, the sensitivity analysis allows the reader to understand the full range of plausible results and make decisions under uncertainty. A business owner negotiating the sale price needs to know how much the price could fall if the buyer challenges the growth projections. A judge who must fix the value of shares needs to see that the valuer has considered alternative scenarios.
Section 8: Conclusion and Limitations
Summary of the resulting value range, expressed as an interval (not as a single number, except in mandatory fair value reports), and a declaration of the limitations of the work: unaudited information, management projections not independently verified, unquantified risk factors.
The conclusion must be honest about what the report can and cannot demonstrate. A valuer who presents their result as a certainty is misleading their reader — business valuation is a technical discipline with inherent uncertainty, and the best reports acknowledge this explicitly.
How Much a Valuation Report Costs
The cost depends on the purpose of the report, the complexity of the business and the level of defence it must offer before third parties.
| Report Type | Scope | Timeline | Indicative Cost |
|---|---|---|---|
| Indicative valuation | Single company, no data verification, non-binding | 2–3 weeks | €3,000 – €6,000 |
| Full M&A report | Single company, adjusted EBITDA, 2–3 methods, sensitivity analysis | 4–6 weeks | €8,000 – €15,000 |
| Expert witness report for litigation | Robust methodology, defensible in court, possible expert testimony | 6–8 weeks | €12,000 – €25,000 |
| Business group report | 3–10 entities, consolidation, intercompany adjustments | 6–10 weeks | €20,000 – €40,000 |
| IAS 36 impairment test | Cash-generating unit, DCF per IAS 36 | 3–5 weeks | €8,000 – €20,000 |
These ranges are indicative for businesses with revenues between €1M and €30M. More complex situations — international activity, complex shareholding structure, open litigation, multiple business units — will typically sit at the upper end or above.
An indicative valuation at €4,000 may be sufficient to have a reference figure before an informal negotiation. The sale of an €8M business deserves a full report at €12,000 that the seller can defend page by page before the buyer’s M&A team.
How to Distinguish a Rigorous Report from a Superficial One
After reviewing hundreds of valuation reports — our own and third parties’ — in due diligence processes and litigation, our team has identified five indicators of work that will fail when it matters most:
Red flag 1: only one valuation method. A report presenting only DCF, or only multiples, is an incomplete report. The robustness of a valuation comes from convergence between independent methods. With only one method, the reader cannot determine whether the result is consistent with the market or with the business’s cash-generating capacity.
Red flag 2: EBITDA not adjusted. If the report applies the multiple directly to accounting EBITDA without analysing adjustments — owner’s salary, personal expenses, exceptional items, below-market rent — the result can be inflated or deflated by 20%–40%. A buyer or an opposing expert will identify that error within minutes.
Red flag 3: no sensitivity analysis. A report presenting value as a single number without sensitivity analysis ignores the inherent uncertainty in any financial projection. In adversarial contexts — litigation, tense negotiations — that analysis is the difference between a report that holds and one that collapses at the first question.
Red flag 4: comparable sources not cited. “We have applied a 6x multiple in line with the market” without citing the transactions that underpin that 6x is an unsupported assertion. A rigorous report cites data sources (TTR, Mergermarket, ASCRI, internal database) and the comparable transactions or companies used, with their valuation metrics.
Red flag 5: assumptions and limitations not declared. A report that does not set out the growth assumptions used, which WACC it applied and why, nor the limitations of the work (unaudited data, management projections not independently verified) is not a professional report — it is an opinion in report format.
The Report You Need Is the One You Can Defend
Business valuation is an exercise in technical argument, not arithmetic. The numbers matter, but what distinguishes a useful report from a useless one at the critical moment is its capacity to withstand the scrutiny of someone who has incentives to question it.
A sophisticated buyer has an M&A team that will look for errors in your report. An opposing expert in litigation will look for weak assumptions. An AEAT inspector will verify that the declared value is consistent with sector transactions.
The report you need is not the cheapest or the longest. It is the one that explains every number clearly, cites the source of every piece of data, acknowledges uncertainties and reaches a conclusion that holds when challenged.
At BMC our valuations team produces reports for all the contexts described in this article: sales, litigation, tax planning and financial reporting. If you need to understand which type of report is appropriate for your specific situation, begin by reading our EBITDA multiples by sector in Spain table — the two reference documents with which we work before every valuation mandate.
If your business operates in a sector with significant litigation risk, or if the transaction has material tax implications, our forensic accounting team can complement the valuation work with analysis of hidden contingencies and a review of financial information integrity.
