Ertragswertverfahren

Ertragswertverfahren is the method that values a pharmacy on the earnings it can be expected to produce, not on the equipment, fittings and stock it owns. The reasoning is that a buyer is paying for a future income stream and that the assets are only the means of producing it. In outline the method runs in four steps. The results of the past several years are established, they are weighted so that the most recent years count for more, a salary for the owner's own work is deducted, and what remains is capitalised into a single present value.

The starting point is the Betriebsergebnis of those past years, adjusted so that items which will not recur are taken out and the years are comparable with each other. Because the owner's own labour never appears as a cost in the accounts of an owner managed pharmacy, a kalkulatorischer Unternehmerlohn has to be deducted before anything is capitalised. Without that deduction the method would treat the owner's working time as if it were profit.

The two decisions that move the answer most are conventions rather than standards. The salary deducted is chosen by the person doing the valuation, not read off a table, and the rate at which the remaining earnings are capitalised is chosen in the same way, because it has to express how risky and how durable those earnings are thought to be. Neither figure is fixed anywhere. This is the point an owner reading a valuation needs to hold on to. Two advisers can value the same pharmacy, arrive at figures a long way apart, and both be defensible, because each made different but reasonable assumptions. A valuation is an argument with numbers in it rather than a measurement.

Most of what the method produces sits in the ideeller Wert, the part of the price that is neither equipment nor stock, and that is also the part which rests on the assumption that the earnings continue after the person who produced them has left. The result is sometimes restated afterwards as a Kaufpreisfaktor, a multiple of earnings or of turnover, which summarises a valuation rather than performs one. Older surveys of pharmacy purchase prices still circulate as though their figures were current, and they are no substitute for a valuation of the practice in front of you.

What a defensible figure looks like depends on the practice and on the adviser doing the work, and how the transaction is taxed depends on the individual situation, so both belong with a valuation adviser and the Steuerberater before an offer is made.