Section 1
The core idea in one line
A buyer does not pay for what your firm earns. A buyer pays for what your firm will earn without you. So the first move in any honest valuation is to strip your own labor out of the earnings, at market rate, before you capitalize anything. If the firm cannot pay a fair salary for a replacement of you and still leave a profit, then the profit you have been counting was never enterprise value. It was your wages wearing a disguise. The German trades built an entire valuation method around exactly this correction. The AWH standard, from the trades' working group on valuation and endorsed by the ZDH, is a capitalized-earnings method designed for small owner-run firms. Its defining move is to deduct a kalkulatorischer Unternehmerlohn, an imputed owner salary, from profit before valuing the business, and then to price owner-dependency as an explicit risk surcharge on the capitalization rate. It is recognized by chambers, banks, tax advisors, and tax offices. We will use its logic because it was built for precisely the firm you own.
Section 2
The artifact: the transferable-value worksheet
Work top to bottom. Each block feeds the next. Block A: normalize the earnings (the add-backs) Start from your reported operating profit and adjust it to what a normal buyer-operator would actually earn. Add back the costs that are personal to you and not part of running the business. Subtract the costs a buyer will really face that you have been avoiding. This subtotal is often called seller's discretionary earnings in Anglo-American practice. It is a real number, but it is not yet value, because it still contains the wage for the work you personally do. Block B: subtract a fair replacement wage for you This is the step owners skip and buyers never do. Deduct what it would cost to hire someone to do the job you actually do in the firm. Use the AWH logic: take the market salary of an employed master or senior operator in your trade, add the employer's share of social costs, then add a surcharge of 20 to 50 percent for genuine entrepreneurial burden (extra hours, liability, risk). Where you sit in that 20 to 50 percent band is set by four things the AWH method names: your weekly overtime hours, the firm's turnover, the number of employees, and the return on the equity in the business.
Section 3
The artifact: the transferable-value worksheet (continued)
Normalized earnings (Block A) minus the imputed owner salary (Block B) equals your cleaned, transferable earnings. In the AWH handbook's own worked example, an average profit of 150,000 euros minus a 70,000 euro imputed owner salary leaves 80,000 euros of cleaned earnings. That 80,000, not the 150,000, is what gets valued. Sit with that. More than half the headline profit was the owner's wage. Block C: capitalize at a risk rate that reflects dependency Now turn cleaned earnings into a value. The capitalized-earnings method divides sustainable earnings by a capitalization rate. For small trade firms the AWH standard uses after-tax capitalization rates that typically run between 15 and 25 percent, far higher than for a large diversified company, because a small owner-run firm is genuinely riskier. A higher rate produces a lower value. The capitalization rate is where owner-dependency gets priced. The AWH standard handles dependency as a surcharge (a Zuschlag) added to the rate. The more the firm's earnings ride on the owner personally, the higher the surcharge, the higher the total rate, the lower the value. That is not a penalty someone invented to lowball you. It is the arithmetic of risk: earnings that vanish when one person leaves are worth less than earnings that do not.
Section 4
The artifact: the transferable-value worksheet (continued)
Value from earnings = cleaned earnings divided by total rate. Using the AWH example: 80,000 euros of cleaned earnings at a 20 percent rate gives an earnings value of 400,000 euros (80,000 divided by 0.20). Push the rate to 25 percent because dependency is severe and the same earnings are worth 320,000. Eighty thousand euros of value evaporated purely because the firm leans harder on the owner. That gap is the owner-dependency discount, made visible. Block D: score the dependency (what sets the surcharge) Rate each item honestly. Every "yes" pushes your dependency surcharge up and your value down. This is also your fix-list, because every one of these is something you can change before you sell.
Section 5
The artifact: the transferable-value worksheet (continued)
Block E: split the value into two piles Finally, separate what a buyer can carry away from what dies with your departure.
Section 6
The artifact: the transferable-value worksheet (continued)
The transferable pile is your realistic sale price. The owner-locked pile is the value you can still recover, but only by converting it into transferable form before you leave: documenting the pricing, moving relationships to the firm, training and qualifying a successor. Every item you move from the second pile to the first raises the number a buyer will pay. This worksheet is not just a valuation. It is a to-do list ranked by euros.
Section 7
Why two models, not one
Comparative statics. The worksheet is one long exercise in moving a single variable and reading the result. Raise the dependency surcharge by five points and the value drops by a fifth. Move one customer relationship from personal to firm-held and the surcharge eases. This first-order lens is exactly right for a seller deciding where to spend the next two years, because it ranks your fixes by their effect on price. Comparative statics, the direction lens. Assumes you can change one input at a time and trace the value shift. Fits because a valuation is a chain of single inputs. Breaks when inputs move together, for instance when documenting your pricing also frees you to win larger jobs, so the real gain exceeds the worksheet's. Counteracts the fantasy that reputation alone sets price. May reinforce false precision, so treat the euro figures as ranges, not verdicts. Behavioral, specifically anchoring. Owners anchor on the headline profit and on what a neighbor's firm supposedly sold for, and they defend that anchor against a buyer who is anchored on post-departure earnings. Naming the imputed owner salary out loud breaks your own anchor before a buyer breaks it for you, in a negotiation, at a discount. Behavioral anchoring, the bias lens. Assumes both sides are pulled toward reference points that may be wrong. Fits because seller and buyer anchor on different numbers and negotiate the gap. Breaks when a genuinely strategic buyer pays above any model for reasons of their own, such as buying your route density. Counteracts the seller's over-attachment to headline profit. May reinforce the opposite error, talking yourself too low, so anchor on the cleaned earnings, not on fear.
Section 8
The blind spot
This template values a firm as a going concern that keeps operating. It cannot tell you the one thing that often matters most, which is whether any qualified buyer exists at all. A firm can score beautifully on transferable value and still not sell, because in a licensed trade the pool of people able to own it is nearly empty, a scarcity documented across this cluster. Value and salability are not the same thing. A high transferable-value score makes your firm worth more to whatever buyer appears. It does not make the buyer appear. That job belongs to the succession pipeline in the companion article, and the two only work together. Run the fitness test. Take last year's profit, subtract a fair market salary for a replacement of you, and look at what remains. If the honest answer is "not much," then you do not yet own a sellable business. You own a well-paid job. The work of the next two years is to turn the first into the second, and this worksheet tells you, line by line, where the money is.