Company value and sale proceeds: how much capital actually arrives?
Operating business value, the price of your shares and cash in your account are different measures. A proceeds bridge shows how debt, surplus cash, deferred payments and transaction costs affect the amount available immediately.
The essentials
- Distinguish enterprise value from equity value.
- Separate immediate, deferred and conditional payments.
- Plan reinvestment using capital that is actually available.
Start with the bridge from enterprise to equity value
Here, enterprise value represents the operating business independently of its funding. In a simplified bridge, agreed financial debt is deducted and transferable surplus cash is added to obtain equity value. Other claims or non-operating assets may require further adjustments.
Not every franc in a business bank account is surplus. The company needs operating liquidity. Buyer and seller must define debt-like and cash-like items and agree the normal level of working capital to be delivered.
Source: Wall Street Prep · Equity ValueCHF 4 million of business value is not CHF 4 million in cash
This illustrative example assumes the sale of 100% of the shares. CHF 4’000’000 of enterprise value less CHF 900’000 of agreed debt plus CHF 200’000 of surplus cash gives CHF 3’300’000 of equity value. No additional working capital price adjustment is assumed.
CHF 400’000 is deferred as a vendor loan and up to CHF 500’000 is conditional on future performance. Cash at completion is therefore CHF 2’400’000 before costs and taxes. After illustrative transaction costs of CHF 100’000, CHF 2’300’000 is immediately available, still before the seller's sale-related taxes. This is not a claim of after-tax proceeds.
Illustrative assumptions, not market values or client transactions.
100% of the shares. No additional working capital adjustment. The tax budget remains unresolved.
Payment terms belong in the price negotiation
Two offers with the same nominal headline amount can have very different economics. Cash paid today is available now. A loan falls due later and involves credit risk. An earn-out also depends on specified conditions being met.
Compare offers on the same basis: cash at completion, fixed deferred amounts, conditional consideration, security, costs and unresolved tax questions. This makes clear which part of an offer can already support the next decision.
Source: UBS · Verkaufsverhandlungen erfolgreich abschliessenBase the next investment on actual liquidity
Begin with a liquidity reserve and personal commitments after the handover. Only then consider the capital available for longer-term investment. An unpaid earn-out should not have to finance a commitment already made.
The calculator lets you allocate proceeds between reserves and reinvestment, and compare an unleveraged investment with a property financing scenario. Returns, interest, costs and tax budgets remain assumptions. Share versus asset deal treatment and actual taxes require separate review by qualified advisers.
- How much cash must be available at completion?
- What payment delays or defaults could you absorb?
- What obligations to the business will continue after the sale?
Common questions
Should debt be deducted again after calculating equity value?
If a debt item has already been included in the enterprise-to-equity bridge, the same item must not reduce proceeds a second time. The agreed definitions are decisive.
Is a private company sale always tax-free?
No general conclusion is appropriate. Ownership structure, residence, transaction form and individual circumstances need professional review before signing.
Sources & further reading
General information. Examples and assumptions do not replace a review of your business or individual legal, tax and investment advice.
