AWH standard
The AWH standard ("AWH" = working group of value-determining consultants in the trade) is a standard for the company valuation of small and medium-sized businesses. The valuation system is based on the income value method and is based heavily on the IDW S1 standard, but has been modified or supplemented at those points where the IDW standard is difficult or impossible to apply to small and medium-sized businesses. The AWH standard was developed by consultants from the trade organization and is mainly used there.
Systematics
The AWH standard is based strongly on the regulations of the IDW standard S1 and ES 1. The capitalized earnings method is generally used. An attempt is made to derive an operating result that is as neutral as possible and to compare this with the risk of the "capital investment company".
The system of valuation provides for the most neutral possible income from the business to be valued to be determined (correction, for example, for rent payments that are not in line with the market, etc.) and then discounted with a capitalization interest rate. The risk structure of the company to be valued is mapped with surcharges on the capitalization rate. This is probably the biggest deviation from the procedure within the framework of the IDW standard, which provides for the mapping of the individual company risk solely through changes in the forecast income and not through adjustments on the side of the capitalization interest rate (see also IDW practical note 01/2014: "Special features when determining an objectified company value of small and medium-sized companies).
Differentiation from existing rating systems
The AWH procedure takes into account the special features of small and medium-sized companies. These are among others:
- strong character of the company from the owner
- Integration of private and business assets
- often a lack of planning
This is taken into account with the following special features that set the AWH procedure apart from the previous systematics for company valuation:
- Derivation of the plan values from the weighted past figures
- Approach of the imputed entrepreneur's wages by deriving collective wages plus surcharges is possible
- detailed risk assessment through surcharges on the capitalization interest rate in 10 risk categories
- Strong consideration of owner dependency through high weighting in the risk analysis
Among other things, this means that post-tax capitalization rates of between 15 and 25% are regularly used for valuations according to the AWH method, which ultimately takes into account the actual risk structure of a craft business and generally of a small and medium-sized enterprise.
This is shown in a survey that was carried out in 2008 on the occasion of the discussions about the recognition of valuations for inheritance and gift taxes . In a nationwide survey among the chambers of skilled trades, the values determined by companies (using the AWH method) were compared with the purchase prices actually achieved. The result was that the post-tax capitalization rate that would have led to the purchase price actually achieved would have been an average of 19.44%.
Current distribution
The AWH standard is used nationwide by almost all chambers of crafts and numerous professional associations. The consultants who apply this standard are professionally trained in regular basic and advanced training courses.
The “Corporate Assessment Planning Group” has been an official body in the Central Association of German Crafts (ZdH) since 2005 , and the standard has been further developed and disseminated within this planning group.
Recognitions
In addition to the official installation of the AWH procedure as a standard assessment procedure in the German trade, this was officially recognized in 2008/2009 as a procedure typical of the industry for determining the company value for the purposes of inheritance and gift tax. A working group of the Federal Ministry of Finance and all state finance ministries stipulated in January 2009 that the AWH procedure can be used for the purposes of business valuation to determine the tax base for inheritance tax. In the current discussion about an amendment to the Inheritance Tax Act, attempts are also being made to allow the AWH standard to continue to be recognized as a typical industry assessment procedure.
Origins and beginnings
The first work on developing its own standard for the company valuation of small and medium-sized enterprises began at the end of 2002. Management advisors from the Bavarian Chamber of Crafts and the Ulm Chamber of Crafts met regularly to collect previous approaches to company valuations and to develop a common framework. The reason was the observation that the market had not yet taken sufficient account of the particularities of craft businesses, and thus small and medium-sized businesses in general, in the existing methods of assessing the value of businesses. The aim of the group was therefore to develop a set of tools that would be especially suitable for these companies.
After around two years of work, the first version of the “AWH Standard” was published in 2004. By 2006, the manual for company valuation according to the AWH standard had already been downloaded more than 6,000 times, and its acceptance rose steadily. Version 2.0 was released in 2006, which contained further refinements and adjustments. This was followed by further developments until the current version of the AWH standard 5.0 was published in 2013.
literature
- Andreas Conrad Schempp: Company valuation in the craft. Business analysis of the AWH standard for company valuation. Ludwig Fröhler Institute, Munich 2012. ISBN 978-3-925397-68-4 ( online , PDF file)
Web links
- Homepage of the working group of value-determining business consultants in the craft
- What a company costs. at handwerker-magazin.de
Individual evidence
- ↑ Flyer AWH ( Memento of the original from January 7, 2014 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. .
- ↑ Press release ZdH on the AWH standard .
- ↑ official AWH page .
