Curious to know who does / does not obtain valuations for UK sweet equity?

April 09, 2025

by a professional from University of Bristol in London, UK

Hi all - we are often asked to perform valuations of sweet equity in search deals for UK tax purposes: however we're not sure whether this happens in all deals (e.g. where there may be a default presumption that such shares are £nil if under the water at issue).

As such I'm keen to get different perspectives on this from those involved in such deals - who does & does not get such valuations done, and what is the rationale for the decision?

Reply by an intermediary
in United Kingdom

Thx ^redacted‌. So many different variables to the deal structure which can affect the valuation & also the tax treatment. There isn’t a golden rule. If you have a specific case then feel free to message me and I’ll put you in touch with one of our accountancy firms who can advise on the specifics redacted

Reply by a searcher
in Canterbury, UK

Consulting for equity is usually based on achieving a certain value gain from the agreement date. The time period, required gain and % equity should be agreed. The equity should be given as an option so that you do not have a tax burden that can not be financed with a sale. In this sceario, the valuation is not done as you will not realise it until there is the capital event. Your equity is derived for the value since you were brought in.

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