Revised IDW S 1 Standard Clarifies Business Valuation Methods

The Institute of Public Auditors in Germany (IDW) has released an updated version of its standard for business valuation, IDW S 1. The revised standard, effective in 2026, seeks to provide clearer distinctions between different types of business valuations depending on their specific use case.

The updated IDW S 1 standard delineates three primary formats for business valuation: value calculation, statement, and expert report. These are differentiated by their intended purpose, depth of review, and the nature of their outcomes.

The value calculation format is designed for initial assessments and strategic planning, offering a simplified insight into a company's worth. The statement format serves as a basis for informed decision-making with a more thorough analysis, suitable for scenarios like M&A negotiations or succession planning. The expert report represents the most comprehensive valuation, utilized in situations with legal or judicial implications, such as inheritance matters or corporate disputes.

Consulting firm dhpg highlights that the revised standard introduces greater clarity and practical relevance to business valuations. The selection of the appropriate valuation method is dependent on the specific circumstances and objectives of each case.