Your Business Is Not Worth What You Think — and Your Accountant Lied to You

You have spent twenty years building your business. You know every client, every contract, every cog in your organisation. And when you ask your accountant what your SME is worth, they pull out their spreadsheets, apply an EBITDA multiple, add up a few net assets, and announce a figure that seems logical to you. Reassuring, even.

Except that this figure is probably wrong. Not because your accountant is incompetent — but because they are answering a different question from the one a buyer will actually ask. And this confusion can cost you hundreds of thousands of francs when you sell in French-speaking Switzerland.

Accounting valuation: a mirror of the past, not a window onto the future

A balance sheet is a snapshot. It captures what you have accumulated, depreciated and provisioned. It faithfully reflects your entrepreneurial history. But a potential buyer — whether a trade acquirer, a private investor or an internal buyer in French-speaking Switzerland — is not interested in your past.

They are buying future cash flows. Financial flows that will be generated without you.

This is the fundamental misunderstanding at the heart of the vast majority of SME transfers I observe in French-speaking Switzerland. The owner-manager presents a valuation based on backward-looking methods. The buyer, meanwhile, projects, models and anticipates. And these two views of value often diverge dramatically.

What your EBITDA does not tell you

EBITDA — earnings before interest, taxes, depreciation and amortisation — has become the leading metric in valuation discussions. Applying a multiple of 4x or 6x to your EBITDA gives the impression of an objective, universal method.

But this multiple hides a far more nuanced reality. Here is what EBITDA alone fails to capture:

• Dependence on the owner-manager: if your departure leads to the loss of key clients, the multiple drops sharply
• Client concentration: a client accounting for 40% of revenue is a major red flag
• The quality of the team in place: is there a management team capable of steering the business without the founder?
• The recurrence and predictability of revenue: multi-year contracts are worth far more than one-off sales
• Deferred investment: your ageing equipment does not show up in EBITDA, but the buyer will have to fund its replacement

An SME in Geneva or Vaud with an EBITDA of CHF 500,000 can be worth anywhere between CHF 1.5 and 4 million depending on these parameters. The gap is considerable — and it depends entirely on factors your accountant has no mandate to analyse.

The most underestimated factor: dependence on the owner-manager

Ask yourself this brutal question: if you disappeared tomorrow, what would be left of your business in six months?

If the answer makes you uncomfortable, you are not alone. The vast majority of French-speaking Swiss SMEs rest on the personality, network and expertise of their founder. That is often what explains their success. But it is also what destroys their value when they are sold.

A rational buyer will never pay full price for a business whose value evaporates the moment its owner-manager leaves.

How the buyer perceives this risk

During due diligence — the audit phase that precedes any acquisition — experienced buyers systematically seek to measure this level of dependence. They ask very specific questions:

• Who signs the major commercial proposals?
• Who manages the relationship with the three largest clients?
• Who holds the critical technical know-how?
• Which manager could take over day-to-day operations tomorrow?

If the answers all point back to you, the buyer will factor this risk into their valuation — as a discount on the price, a conditional earn-out, or a long and demanding transition period for you.

Adjusted net assets: the asset-based method and its limits

The other major method commonly used by Swiss accountants is the adjusted net asset valuation. All of the company's assets are listed — machinery, inventory, receivables, property — revalued at market value, the debts are deducted, and the result is the intrinsic value of the business.

This approach is relevant for capital-intensive companies — an industrial business with significant assets, or a property holding company. But for a service SME, a fiduciary firm, a communications agency or a consulting practice in French-speaking Switzerland, it is dangerously unsuitable.

Why? Because the real value of these businesses lies in intangible assets that the balance sheet does not capture: reputation, client portfolio, teams, processes, brand. And it is precisely these assets that generate the future cash flows the buyer is looking to acquire.

What a buyer is really purchasing

Let us put ourselves for a moment in the shoes of a serious acquirer prospecting in French-speaking Switzerland. They do not read your balance sheet like an accountant. They read your business like an investor.

Here is what really determines their willingness to pay:

• The robustness of the business model: is revenue predictable, recurring and defensible against competitors?
• The company's ability to operate without its founder: is there an autonomous, competent team?
• Growth potential: can they develop the business with their own resources and network?
• The transferability of client relationships: will clients stay after the change of ownership?
• The quality of documentation and processes: is the business organised, or does it run on informal habits?
• Hidden risks: ongoing disputes, technological dependencies, unfavourable contracts coming up?

Each of these elements influences the final price — sometimes far more than the figures in your financial statements.

Preparing your sale in French-speaking Switzerland: act before it is too late

The good news is that the value of an SME is not set in stone. It can be worked on, optimised and built — provided you plan far enough ahead.

The owner-managers who achieve the best valuations when transferring their business in French-speaking Switzerland are those who started preparing their exit two to five years before the actual sale. This lead time allows them to:

• Gradually reduce dependence on the owner-manager by delegating and structuring the management team
• Diversify the client portfolio to eliminate risky concentrations
• Document key processes and formalise tacit know-how
• Optimise the legal and tax structure ahead of the sale
• Regularise ambiguous contractual situations with clients, suppliers and employees
• Build a clean, readable and convincing financial track record for a buyer

The most common mistake: confusing an accounting adviser with a business transfer adviser

Your accountant or fiduciary is a valuable partner for the day-to-day management of your business. They master your taxes, your legal obligations and your financial reporting. But business transfer is a profession in its own right, calling on radically different skills: strategic valuation, negotiation, deal structuring, psychological support for the seller, and introductions to buyers.

Entrusting your sale solely to your accountant is like asking your GP to perform your heart surgery. They have the basics, but it is not their speciality.

In French-speaking Switzerland, well-advised SME transactions achieve on average significantly higher valuations than those negotiated without a specialist adviser. The fee of a business transfer intermediary is almost always more than offset by the additional value obtained.

The real question to ask before setting a price

Before talking numbers, ask yourself this fundamental question: can my business thrive and generate profits without me over the next five years?

If the answer is yes — or if you can make it true within the coming months — then your business has real, transferable, financeable value. A buyer can project it into the future.

If the answer is no, the work of preparing for the sale still lies ahead of you. And it is precisely this work that will make the difference between a successful transfer and a painful negotiation in which you hand over your life as an entrepreneur at a price that does not reflect what you deserve.

Conclusion: valuation is a conversation about the future

Your accountant did not lie to you deliberately. They answered the question they were asked, with the tools they know. But valuing an SME in the context of a sale is a forward-looking, strategic and deeply human exercise — far beyond the columns of a balance sheet.

The value of your business, in the eyes of a serious buyer in French-speaking Switzerland, depends on its ability to live and grow after you. The more robust, autonomous and well-documented the organisation you have built, the higher that value will be — and the smoother your transfer.

Start preparing your exit today. Not to leave tomorrow — but so that, when the day comes, your business is truly worth what you invested to build it.