SMEs represent 99% of all businesses in the European Union (EU). They are no longer bound solely to national operations. Instead, they are internationally and globally active and represent attractive cross-border target companies. This increasing attractiveness raises the question for many entrepreneurs about their company’s value. Different opinions on valuation techniques and methods result in different expectations on value and price which makes it harder to compare and does not provide transparency. Research on the evaluation of SMEs is predominantly nationally oriented and illustrates the practice of individual countries. Comparative research is complicated by the fact that national standards are only available in the national language, as in Italy, or at best in English, as in Spain but is limited towards the basic principals. Carland and White (1980) compared national and international standards for company valuation in a first approach but did not address the valuation practices or the unique features of SMEs. Fleischer examined comparative literature in several articles published since 2012 but limited himself to stock corporation and valuation law cash settlement claims. As for Italy, a newer approach by the Organismo Italiano di Valutazione (2018) tries to close this gap by publishing topics of cross-border interest in English in the Business Valuation Journal. However, there is a need for a comparative study on the valuation methods of SMEs across Europe for more transparency in terms of valuation.

In the first step, we conducted extensive desk research, intending to review previous research findings to gain a broad understanding of the business valuation of SMEs in Europe. For the desk research, several sources were considered, from internet searches to research in university libraries. However, there was only a minimal number of qualified sources available. Besides, many findings were exclusively accessible in the national languages, which made it difficult to understand the content. Therefore, secondary research in the form of a survey with the aid of SurveyMonkey was conducted. From the 45 universities specialised in the field of corporate finance, which we have written to, only a 4.4% response rate has been achieved and all response could not be considered for further analysis because they were answered too broad. Due to the fact, that the survey failed to deliver new insights and findings, this research is based on the knowledge gained through the preliminary desk research and some additional research after the conclusion of the survey.

Based on the research performed in the scope of this work, foreign direct investment in SMEs is becoming more critical. In terms of business valuation methods for SMEs, there are almost no legislative requirements as to which method has to be chosen in France, Italy, the UK, or Spain. However, during the extended analysis, it can be concluded that cultural impacts have a significant influence, especially on SMEs. In the Mediterranean area such as in Italy and Spain, many SMEs are family-owned companies. These family businesses are not as agile as other SMEs and their value is more connected with the personality and character of the owner itself rather than the pure business itself. One commonality that was observed was the use of the DCF method in all countries to some extent but again, with national differences. Since the client will use our results for further research, several benefits can be derived. On the one side, it is difficult to find good secondary sources in libraries or on the internet. Not only is this because of the limited resources, but also because not many papers and researches have been published who are dealing specifically with the valuation in Italy, Spain, France and the UK. On the other side, it is not possible to gain primary data from different professors at universities with a standardised mailed survey. Conducting a similar survey again would be purposeless. However, we would recommend that primary data could be acquired by contacting the Big Four such as KPMG, Deloitte, EY, and PwC or individual professors from universities in a direct request rather than a survey.