Lack of availability of financial information

Depending on how the disclosure requirement is regulated in the country, smaller companies also have to publish their business results, depending on their legal form. Basically, however, there is significantly less information publicly available for small companies. Large companies often receive additional extensive reporting from financial analysts who can support a valuation. Small companies have less or no such reporting.

Market liquidity

Large companies’ stocks tend to be more liquid and easier to trade, making it easier to determine their market value. Shares in small companies, especially minority shares, are difficult to trade, which makes the valuation more complex.

Risk profile

Small businesses tend to be riskier than large businesses. They are more vulnerable to market fluctuations, competitive pressures and management errors. This must be taken into account when evaluating.

Transferability and management quality

How dependent is the company on the owner? A large dependency has a negative impact on the rating. The quality of management also has a greater influence on company value in small companies. The skill and experience of the company management are crucial factors, and it must be ensured that the management supports a change of ownership and remains with the company at least for a certain period of time.

Market dynamics

If small companies operate in niche markets that change faster and are more volatile than the markets of large companies, this requires a precise analysis of market dynamics.

Assessment methods

Nimbo publishes current multiples for small companies in various industries in numerous countries on its website every month. This also offers small companies the opportunity to value their company using the market value method. Other common valuation methods for small businesses are the income method or the intrinsic value method.