Valuing a business for sale takes four steps: clean profit of one-off and personal items, apply the multiple of comparable deals, cross-check with cash flow and net assets, then subtract debt to get the price of the shares.
A benchmark for small businesses in Spain: sellers usually ask 3–5 years of pre-tax profit. The result is a range.
Owners usually have a figure in mind, buyers have another, and the gap is filled with arguments rather than facts.
A valuation replaces “I think it is worth” with a calculation: what profit the business really produces, how stable it is, what similar companies sell for and what risks a buyer will price in.
Below: how to value a business step by step, which methods to use, an illustrative calculation, what raises and lowers the price, and what to consider when selling in Spain.
Why the owner’s figure and the buyer’s price differ
- The owner counts what went in: years of work, refurbishment, equipment, the customer base. The buyer pays not for the past but for future profit.
- The owner sees the “real” profit, including cash takings not in the accounts. The buyer only counts what is backed by documents and bank statements.
- The owner is part of the business. If customers, suppliers and staff depend on them, profit may leave with them after the sale, and the buyer will factor that in.
That is why it pays for a seller to value the business through a buyer’s eyes before going to market: you can see what will cut the price and still have time to fix it.
How to value a business: five steps
- Define the purpose. Selling the whole business, selling a stake, a partner coming in — the purpose determines the method and what exactly is valued: the whole business or a stake with its rights.
- Normalise profit. Take 2–3 years of accounts and remove what will not recur for a new owner (more below).
- Calculate with two or three methods and compare: if they diverge sharply, look for the reason in the assumptions.
- Move from business value to equity value: subtract debt and add surplus cash — that gives the value of the equity.
- Set a range and arguments: the lower end is how far you will negotiate, the upper end is what you can defend with facts.
Normalising profit: where a valuation starts
A small business’s accounting profit is almost never what a buyer will get. Normalisation brings it to a “market” figure:
| Adjustment | What we do | Effect on profit |
|---|---|---|
| Owner’s salary | Replace it with the market salary of the manager a buyer would hire | If the owner paid themselves below market, profit falls; if above, it rises |
| One-off costs and income | Remove legal costs, one-off repairs, equipment sales, subsidies | Depends on the sign |
| Owner’s personal expenses | Remove the car, trips and family costs run through the business | Profit rises |
| Rent paid to related parties | If the owner owns the premises, use a market rent | Usually profit falls |
| Unverified revenue | Exclude anything not in the accounts and bank statements | Profit falls |
For companies, normalised EBITDA — earnings before interest, taxes, depreciation and amortisation — is the usual measure.
For very small owner-operated businesses, seller’s discretionary earnings (SDE) are sometimes used: they show what the business brings to the person who will run it.
Valuation methods
| Method | How it is calculated | When it fits | Weak spot |
|---|---|---|---|
| Income: discounted cash flow (DCF) | Free cash flow forecast for 3–5 years plus a terminal value, discounted to today at a rate reflecting risk | A profitable business with a clear forecast | Sensitive to the forecast and the discount rate |
| Market: multiples | Normalised profit (EBITDA or SDE) × the multiple of comparable deals; sometimes revenue × a multiple | There are comparable deals in the sector and region | Small-business deal data is scarce and uneven |
| Asset-based: net assets | Assets at market value minus liabilities | Asset-heavy or loss-making businesses; a floor for the price | Ignores customers, team and earning power |
Two methods are usually used and cross-checked: for example, a multiple as a market guide and DCF as a test.
For a stake rather than the whole business, adjustments are added: a minority stake without control is often worth less than its proportional share, and rights in the articles and shareholders’ agreement can change that. More on cash flow models: Financial model basics.
A worked example
The example is illustrative: the figures show the logic, and the multiple is chosen for illustration, not as a market benchmark.
The owner is selling 100% of an SL. Reported EBITDA for the last year is €80,000. Adjustments:
- the owner paid themselves €15,000 a year, while a market manager’s salary is €35,000: −€20,000;
- one-off legal costs: +€10,000;
- the owner’s personal car in expenses: +€6,000.
Normalised EBITDA: 80,000 − 20,000 + 10,000 + 6,000 = €76,000.
| Lower end | Upper end | |
|---|---|---|
| Multiple (illustrative) | 3× | 4× |
| Business value: €76,000 × multiple | €228,000 | €304,000 |
| Less net debt (loans €55,000 − cash €15,000) | −€40,000 | −€40,000 |
| Value of 100% of the equity | €188,000 | €264,000 |
Had the owner used the reported €80,000 EBITDA and ignored the debt, they would have expected €240,000–320,000 — €52,000–56,000 more than will survive a conversation with a buyer.
Example: valuing a Spanish SL before a sale
The example is illustrative: the company and figures are invented to show the calculation at the size at which owners typically sell.
The multiple, however, is not a guess — it comes from listings of businesses for sale.
The owner is selling 100% of the shares in an SL — a distributor of food and supplies to cafés and restaurants.
Revenue for the last closed year is €1,500,000, there are 7 employees, and the warehouse is rented from another company the owner owns. Sales are invoiced; there is no cash revenue.
Step 1. Profit as reported.
| Item | Annual amount |
|---|---|
| Revenue | €1,500,000 |
| Cost of goods (64% of revenue) | −€960,000 |
| Gross profit | €540,000 |
| Staff: 7 people incl. social security | −€210,000 |
| Owner’s salary | −€30,000 |
| Warehouse rent paid to the owner’s company | −€24,000 |
| Other expenses | −€96,000 |
| One-off lawsuit with a former partner | −€22,000 |
| One-off income: sale of an old van | +€8,000 |
| Reported EBITDA | €166,000 (11.1% of revenue) |
Step 2. Normalisation, line by line.
| Item | Adjustment | Why |
|---|---|---|
| Owner’s salary | −€30,000 | A buyer needs a sales director: the market cost to the company (illustrative) is €60,000 a year, not €30,000 |
| Warehouse rent | −€18,000 | The market rent for such a warehouse (illustrative) is €42,000 a year, not €24,000 |
| Owner’s personal costs in “other” | +€14,000 | The car and family trips will not pass to the buyer |
| One-off lawsuit | +€22,000 | Will not recur |
| Van sale | −€8,000 | One-off income |
| Normalised EBITDA | €146,000 | 166,000 − 20,000; 9.7% of revenue |
Step 3. The multiple. There is no open data on small-business deal prices in Spain, so listings are the benchmark.
In our sample of 80 listings of companies with €0.5–10m turnover (Bizalia and BusinessesForSale, 19 October 2026), sellers usually ask 3–5 years of pre-tax profit, with a median of about 4.5, and one listing for a Madrid cleaning company sets its price directly at “EBITDA × 3”.
These are asking prices: deals usually close lower, and EBITDA is higher than pre-tax profit. So the example uses 3–4 times normalised EBITDA.
How the sample was built and what it shows by sector: How to buy a company in Spain.
Step 4. From business value to the price of the shares.
| Lower end | Upper end | |
|---|---|---|
| Multiple of normalised EBITDA | 3× | 4× |
| Business value: €146,000 × multiple | €438,000 | €584,000 |
| Less bank loan €120,000 and van leases €30,000 | −€150,000 | −€150,000 |
| Plus surplus cash: €70,000 in the bank − €40,000 working minimum | +€30,000 | +€30,000 |
| Price of 100% of the shares | €318,000 | €464,000 |
A revenue cross-check: the business value is 0.29–0.39 of annual revenue.
In the same sample listing prices are about 0.5–0.6 of turnover (Bizalia and BusinessesForSale medians), but distribution has lower margins than services, so the price is a smaller share of revenue: the gap makes sense.
Had the owner used reported EBITDA (€166,000) and forgotten the debt, they would have expected €498,000–664,000 — €180,000–200,000 more than will survive the buyer’s checks. Closing that gap before going to market is what a valuation is for.
Venues sold through a traspaso are priced differently — from the equipment, the lease and the right to trade in the premises.
Listing prices and payback are covered in Buying or opening a café or bar in Spain and Buying or opening a restaurant in Spain.
What raises and what lowers the price
| Raises | Lowers |
|---|---|
| Profit backed by accounts and bank statements for 2–3 years | Off-the-books revenue and inconsistencies between reports |
| A stable or rising trend | Falling revenue in the last year |
| The business runs without the owner’s daily involvement | Customers and suppliers tied to the owner |
| Many customers, none with a large share of revenue | One or two customers bring most of the revenue |
| A long lease that can be transferred | The lease is ending or its transfer is not agreed |
| Licences and permits in order | Missing licences or breaches |
| Staff contracts in order | Employment disputes and undeclared staff |
Much of the right-hand column can be fixed 3–12 months before a sale.
That is what Preparing a business for sale is for, and an independent business valuation in Spain gives you a report with a defensible range.
Selling a business in Spain: what to factor into the valuation
- Selling shares or selling the business. When SL shares are sold, the buyer takes on the whole company with its history, debts and tax risks, so they check longer and negotiate harder. In a sale of the business (assets) or a traspaso of a small venue, debts usually stay with the seller, and the buyer pays for the equipment, customers and the right to carry on in the premises.
- Staff transfer with the business. A change of owner does not end employment contracts: the new owner becomes the employer under the same contracts (art. 44 of the Workers’ Statute). The buyer will price in obligations to staff.
- The lease. The remaining term and how it can be transferred directly affect a venue’s price: without the premises, many small businesses are worth very little.
- Taxes. The tax consequences of a sale for seller and buyer depend on the deal structure and the parties’ tax residence. Work them out with a tax adviser before signing. If your holding company has owned the stake for at least a year, the gain on selling it is almost tax-free — see the calculation in “Holding company in Spain”.
- Official valuation. If a court, notary or the tax authority requires a valuation, you need a certified valuer or a court-appointed expert. An independent valuation for the parties is a basis for negotiation, not an official document.
If you are buying rather than selling, the check runs the other way: see the Traspaso audit for a small venue and Due diligence when buying a company or a stake.
What to request from the seller is in our free financial due diligence checklist: 40 items in 12 sections, with Spanish document names and red flags (Excel, PDF).
How a valuation for a sale works: steps and timeline
Valuing a company for sale is not a single calculation but a short project.
The timings below are a benchmark for a company with revenue of up to a few million euros; collecting documents usually takes the longest.
| Stage | What happens | Who | Time, benchmark |
|---|---|---|---|
| 1. Introductory call | What is being sold — shares or the business as assets, the purpose of the valuation, the deal timeline | Owner and adviser | 1 day |
| 2. Documents | The owner gathers the pack (list below), the adviser checks it is complete | Owner and their accountant | 1–2 weeks |
| 3. Normalising profit | Expenses reviewed line by line, accounts reconciled with tax returns and bank statements | Adviser | 1–2 weeks |
| 4. Calculation | Two or three methods, cross-checked, sensitivity to revenue, margin and risk | Adviser | About a week |
| 5. Discussion and report | Assumptions discussed with the owner, then a written report with the range and arguments | Adviser and owner | About a week |
Some stages overlap, so the whole valuation usually takes 3–6 weeks.
The buyer will later test the same figures in due diligence — and the fewer discrepancies they find, the fewer reasons they have to cut the price.
Documents you need:
- annual accounts (cuentas anuales) for 2–3 years: an SL must file them with the Registro Mercantil within a month of approving them, so the buyer will see the same figures — they must match what you tell them;
- current-year figures: the trial balance (balance de sumas y saldos) and the general ledger;
- tax returns: corporate income tax — form 200, VAT — form 303 and the annual 390, payroll withholdings — 111 and 190, third-party transactions — 347;
- bank statements — used to verify revenue;
- contracts: the lease, key customers and suppliers, loans and leases;
- staff: the employee list, employment contracts, the applicable collective agreement (convenio);
- the articles, the shareholder register and the shareholders’ agreement, if there is one.
Who does the valuation. An independent adviser prepares a valuation for the parties: a calculation, assumptions and arguments for negotiation.
A broker names a listing price from experience, but their interest is to list the business and close a deal.
An official valuation is needed only if a court, notary or the tax authority requires it.
For a full report with a defensible range, see Business valuation in Spain; for the data pack and arguments before going to market, see Preparing a business for sale.
Seller taxes in brief. What you keep depends on the deal structure, not just the price.
A Spanish tax resident selling SL shares personally pays 19–30% on the gain under the savings income scale.
For tax purposes, the price of unlisted shares cannot be lower than the higher of equity per the last closed balance sheet or average profit over three years multiplied by 5, unless a market price is proven: a low price in the contract will not reduce the tax.
If a holding company that has owned at least 5% for at least a year sells the shares, 95% of the gain is exempt.
A non-resident pays 19%; EU and EEA residents may be exempt, except where the company mainly holds Spanish real estate or the seller’s stake reached 25% in the last 12 months.
The options are set out in the “Seller taxes” section of Preparing a business for sale.
Common valuation mistakes
- Valuing by money invested rather than future profit.
- Using accounting profit without normalisation.
- Including unverified cash takings in profit.
- Applying one multiple “from the internet” without adjusting for the business’s size, sector and risks.
- Forgetting debt and confusing business value with the value of the stake.
- Naming one figure instead of a range — and losing room to negotiate.
Frequently asked questions
How do you value a business for sale?
Normalise profit over 2–3 years, value the business with two or three methods — a multiple, discounted cash flow, net assets — subtract net debt and set a price range with arguments for negotiation.
How does a business valuation for a sale work?
The owner provides 2–3 years of accounts, tax returns, bank statements and key contracts; the adviser normalises profit, values the business with two or three methods, subtracts debt and delivers a price range with arguments. For a small company this usually takes 3–6 weeks, most of it spent gathering documents.
How much is my business worth?
What a buyer will pay for verified profit, less debt. A rough benchmark for a small company in Spain is 3–5 years of pre-tax profit at listing prices; deals usually close lower. Normalising profit and cross-checking two or three methods give a more precise answer.
What does a company valuation for sale include?
Normalised profit with each adjustment explained, a calculation using two or three methods, the step from business value to the price of the shares, a price range, sensitivity to revenue and margin, and a list of what lowers the price and what can be fixed before the sale.
What documents are needed to value a business?
Annual accounts for 2–3 years and current-year figures, corporate income tax, VAT and withholding returns, bank statements, the lease, key customer and loan contracts, staff data, the articles and the shareholders’ agreement.
What is normalised profit?
Profit cleaned of what will not recur for a new owner: one-off income and costs, the owner’s personal spending, a non-market owner’s salary and related-party rent, and unverified revenue.
Which multiple should I use?
One backed by comparable deals in your sector, region and business size. There is no universal multiple: the same figure for a café and an IT company gives a meaningless result, so it is cross-checked with another method.
What is the difference between business value and the value of a stake?
Business value is before debt. To get the value of the owner’s stake, subtract loans and other debt and add surplus cash. For a partial stake, adjustments for control are added.
Do you need an official valuation to sell a business in Spain?
Not for negotiations between the parties — an independent valuation is enough. An official valuation by a certified valuer is needed when a court, notary or the tax authority requires it.
Key points on valuing a business for sale
- Buyers pay for future verified profit, not for what went in.
- Valuation starts with normalising profit.
- Two or three cross-checked methods are more reliable than a single multiple.
- Debt is subtracted from business value to get the value of the stake.
- The result is a range with arguments; weak spots are best fixed before going to market.
Sources
- Workers’ Statute (Royal Legislative Decree 2/2015) — art. 44, transfer of undertakings.
- Bizalia and BusinessesForSale — sample of 80 company listings, 19 October 2026 (asking prices).
- Capital Companies Act (Royal Legislative Decree 1/2010) — art. 279, filing of annual accounts.
- Personal Income Tax Act (Law 35/2006) — arts. 37.1.b, 46, 66, 76.
- Corporate Income Tax Act (Law 27/2014) — art. 21.
- Non-Resident Income Tax Act (Royal Legislative Decree 5/2004) — arts. 14.1.c, 25.
- Spanish Tax Agency (AEAT) — forms 200, 303, 390, 111, 190, 347.
