How to value a Spanish company before you bid

How Spanish sellers and advisers price a company

Spanish family companies between €2M and €50M are priced on a multiple of normalised EBITDA, not on revenue and rarely on discounted cash flow. Knowing the multiple the market has paid in the subsector is the fastest way to tell a serious asking price from an aspirational one.

1. Normalise the EBITDA

Start from the EBITDA in the accounts and adjust it. Remove costs that disappear after the sale (the owner’s car, a family member’s above-market rent) and add a market salary for the manager you will need if the owner leaves. Owners who pay themselves little overstate EBITDA; this is the most common gap between the teaser and the real number.

2. Apply the subsector multiple

Multiply by the range paid in Spain over the last five years: 5.0× for olive oil mills up to 10.0× for mineral water. Brand, contracts signed for more than three years and growth push it up; dependence on one customer and equipment due for replacement push it down.

3. Add what sits underneath

Owned buildings, land, concessions and planting rights are added at appraised value. In food companies they are often a large share of the price: in olive oil mills, land and buildings average close to 40%. Ask for the appraisal in the memorandum, not the book value.

A worked example

A winery with a designation of origin, €4M revenue and normalised EBITDA of €600,000 is worth between €3.6M and €5.1M on multiples (6.0× and 8.5×). With its building and 20 hectares of vineyard appraised at €1.5M, the range is €4.8M to €6.6M. An asking price of €5.5M sits inside it; €8M would need a reason you can verify, such as an export contract or stock valued separately.

What the range does not tell you

Working capital and stock, which in wine and ham are valued apart from the price. Pending licences, environmental permits and the condition of the plant, which is why every company in this portfolio comes with an independent technical due diligence. And owner dependence: if customers follow the founder, plan for a transition period of 6 to 24 months in the deal.