Why the purpose of a share valuation matters

A valuation for an ownership discussion may have different requirements from one supporting an employee share arrangement or a particular reporting purpose. Begin by identifying who will use the assessment and what decision or process it needs to support.

Clarify whether the work concerns existing shares, a proposed transfer or another interest. Different instruments and arrangements should not be treated as equivalent without reviewing the facts.

Share enquiries are welcome. Read about EMI valuation support for employee option arrangements. Any specific submission, tax or legal requirements need to be identified when scoping the engagement, including the role of other advisers. Acceptance by HMRC or another third party is not guaranteed.

Understand the rights attached to the shares

Participation in value

Establish the rights associated with distributions and the proceeds of an exit, including differences between classes where relevant.

Control and decisions

Understand voting rights and other relevant provisions rather than assuming the percentage holding describes the complete position.

Restrictions and agreements

Identify relevant transfer provisions and agreements that need consideration as part of the defined assessment.

These are scoping considerations, not a conclusion about the legal effect of any agreement. The relevant documents and purpose must be understood before selecting an approach.

Why a minority stake may not be a simple percentage

Multiplying a whole-company equity value by a percentage holding gives a pro-rata starting calculation. It does not automatically settle the value of the specific shares. The rights, restrictions and applicable valuation basis may require further consideration.

HYPOTHETICAL EXAMPLE

Twenty per cent of a £1 million whole-company equity figure is £200,000 arithmetically. That calculation alone does not establish a concluded value for a 20% shareholding. The scope still needs to address the shares, their rights, the valuation basis and relevant evidence.

No standard minority discount or control premium is assumed in this example.

Where the decision concerns selling the entire business, see business valuations for sale and exit planning for the broader preparation questions.

What information may be required?

  • The company and exact shareholding or interest to be valued.
  • A current ownership schedule and details of relevant share classes.
  • The company’s articles and relevant shareholder or other agreements.
  • Recent financial information and forecasts where relevant.
  • The proposed transaction, intended use and valuation date.
  • Any specific requirements already identified by your advisers.

The information request is tailored to the engagement. Start with the short enquiry form; financial documents and agreements can be discussed later through an agreed channel.

How a share valuation engagement starts

The first discussion should establish the purpose and timing, then identify what needs to be reviewed before a proposal can be finalised. If another adviser is involved, it can help to clarify their requirements early.

The agreed work should explain the interest covered, assumptions, information relied on and limitations. An informal planning assessment and a report prepared for a specified use are not necessarily the same deliverable.

Read the valuation costs guide for questions to ask about scope, revisions and additional work. Fees and the proposed timetable are agreed individually.

Your questions, answered.

Can you value a minority shareholding?

A minority interest can be discussed as part of the service. The assessment depends on the purpose, valuation basis, rights and relevant information, rather than a standard percentage discount.

Can you help with EMI valuation requirements?

Yes. Describe the employee share arrangement and any adviser requirements when enquiring. The work and any submission support are agreed in the scope, with no guarantee of third-party acceptance.

Do I need a valuation for every share transfer?

The requirements depend on the circumstances and intended use. Explain the proposed transaction so the valuation need and any related adviser input can be discussed.

Can I get a value using only my ownership percentage?

No. The percentage alone does not establish value. The business, share rights, relevant documents and valuation purpose also need to be understood.