Purpose determines method
The first question in any valuation is not what the business is worth. It is what the valuation is for, because that determines the basis, the assumed buyer, and which method is appropriate.
A valuation for a strategic acquirer may reflect synergies a financial buyer would not pay for. A valuation for a partner buyout usually assumes a continuing business without a market process. A valuation for a family settlement may need to reflect a minority interest with no control and no exit. A valuation for accounting purposes follows the applicable standard rather than commercial judgement.
A number without its basis stated is not a valuation. It is an opinion that will not survive the first challenge.
Who this is for
Owners buying out a partner, or being bought out. Businesses raising investment, where a defensible pre-money position is worth having before the negotiation rather than during it. Families dividing or transferring ownership. Businesses restructuring or reorganising a group.
Also businesses in dispute, where an independent valuation is required by the parties or by a process, and businesses needing a valuation for accounting purposes — purchase price allocation, impairment testing, or share-based payment.
What the work involves
How we run it:
- Establish the purpose and basis. Fair market value, fair value, investment value; controlling or minority interest; marketable or not. Everything follows from this.
- Understand the business — what it does, how it makes money, what is durable about it and what depends on the current owner.
- Normalise the financials. Owner remuneration to market, related party transactions to arm’s length, one-off items removed, accounting policy effects adjusted.
- Select the methods, usually more than one, so that the conclusion is triangulated rather than resting on a single set of assumptions.
- Apply the income approach where earnings are reasonably predictable: discounted cash flow, with the discount rate built and explained rather than asserted.
- Apply the market approach where comparable transactions or listed multiples exist, adjusted for size, growth and risk.
- Consider the asset approach, which is the relevant floor for asset-heavy or loss-making businesses.
- Apply discounts and premiums for control and marketability, with the reasoning stated rather than applied by convention.
- Report with the assumptions, limitations and sensitivities set out, so the reader can see what the conclusion depends on.
The UAE-specific adjustments
Valuing an owner-managed business in this market involves adjustments that would not arise in a mature jurisdiction, and skipping them produces a number that will not survive diligence:
- Owner remuneration — frequently set by cash flow rather than by role, and materially distorting earnings in either direction
- Related party transactions — rent from an owner’s property, purchases from an affiliated supplier, management fees, all requiring normalisation to market
- Unprovided end-of-service liability — a real obligation that frequently appears nowhere on the balance sheet
- Historic tax exposure — unregistered entities or VAT errors that a buyer will price
- Free zone status — if QFZP status is fragile, the post-acquisition tax rate may not be the current one
- Key person dependency — where the customer relationships belong to the owner rather than to the business
- Personal expenses run through the business, which cut both ways and need identifying rather than assuming
What a valuation cannot do
A valuation is an opinion on a stated basis at a stated date. It is not a price, and it does not bind anybody.
What a business actually sells for depends on who is buying, how many buyers there are, how the process is run, and how much either side needs the deal. A well-supported valuation gives you a defensible position and a sense of where the range sits. It does not guarantee that a buyer will agree with it, and any valuer suggesting otherwise is overstating what the exercise is.
What it does reliably do is stop a negotiation being conducted on instinct, and give you the ability to explain your position in terms the other side has to engage with rather than dismiss.
What goes wrong
These are the failures we are brought in to correct, in rough order of frequency:
- A number with no stated basis or purpose, which cannot survive the first challenge.
- Applying a rule-of-thumb multiple from a different market to a UAE owner-managed business.
- Not normalising owner remuneration, which is the single largest distortion in most valuations here.
- Ignoring the unprovided gratuity liability, which a buyer will certainly not ignore.
- A discounted cash flow built on a forecast nobody believes, which produces precision without accuracy.
- Discounts applied by convention rather than with reasoning attached.
- Valuing without considering key person dependency, where the business is really the owner’s relationships.
Deadlines that apply
Before a negotiation rather than during it. An owner who enters a partner buyout or an investment discussion without a defensible position is negotiating against somebody who has one.
For a sale process, three to six months ahead, alongside sell-side preparation — because the valuation frequently identifies things that can be improved before going to market. For disputes and settlements, at whatever date the parties or the process specify, which is often historic rather than current and changes the exercise significantly.
What lands on your desk
- A valuation report with the basis, purpose and date clearly stated
- Normalised financials with each adjustment explained
- Application of multiple methods, with the weighting reasoned
- Sensitivity analysis showing what the conclusion depends on
- Assumptions and limitations set out explicitly
- A value range as well as a point conclusion, since a single number overstates precision
Documents we will ask for
The list is short and you will have most of it already:
- Financial statements for the last three to five years
- Management accounts to the most recent month
- Forecasts or budgets, and the assumptions behind them
- Details of owner remuneration and any related party transactions
- Customer concentration and contract terms
- Asset register and details of any property
- Details of borrowings, leases and the gratuity position
- The purpose of the valuation and any basis specified by an agreement
Fees
Fixed fee, scoped on the size and complexity of the business and the level of support required. A valuation for internal planning is a lighter exercise than one that will be relied on in a dispute or filed with a regulator, and it is priced accordingly.
We agree the purpose and basis before quoting, because they determine the work. Where a valuation is likely to be challenged, the additional support and documentation are worth the additional cost — and where it is not, they are not.
Related
Frequently Asked Questions
How is a business valued?
Usually by more than one method, triangulated: an income approach such as discounted cash flow where earnings are predictable, a market approach using comparable transactions or multiples, and an asset approach as a floor for asset-heavy or loss-making businesses. Which dominates depends on the business and the purpose.
Why does the purpose of the valuation matter?
Because it determines the basis and the assumed buyer. A strategic acquirer may pay for synergies a financial buyer would not. A minority interest with no control and no exit is worth less than a proportionate share of the whole. A number without its basis stated is not a valuation.
What adjustments are specific to UAE businesses?
Owner remuneration normalised to market, related party transactions adjusted to arm’s length, unprovided end-of-service liability recognised, historic tax exposure priced, and free zone status assessed — because if QFZP status is fragile, the post-acquisition tax rate may not be the current one.
Will the buyer accept your valuation?
Not necessarily, and no valuer can promise that. What a well-supported valuation does is give you a defensible position and a sense of the range, so the negotiation is conducted in terms the other side has to engage with rather than dismiss.
Should we value before or after due diligence?
They are separate exercises with different purposes, and diligence findings frequently change the valuation. For a sale, doing sell-side preparation first often improves the number, because it identifies things that can be fixed before going to market.
Can you value for a partner buyout?
Yes, and it is one of the most common reasons for this work. The basis usually assumes a continuing business without a market process, and where the shareholders’ agreement specifies a method or a date, that governs the exercise.
Do you give a single number or a range?
A range, with a point conclusion where the purpose requires one. A single figure implies a precision the exercise does not have, and the sensitivity analysis showing what the conclusion depends on is often more useful than the number itself.
Tell us the purpose and the date. Those determine the basis and the method, and a valuation without them stated will not survive a challenge.
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Last reviewed 27 July 2026. Rates, thresholds and deadlines change — the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.