The Institute of Public Auditors in Germany (IDW) adopted the final version of IDW S 13 in 2016. The standard, Besonderheiten bei der Unternehmensbewertung zur Bestimmung von Ansprüchen im Familien- und Erbrecht, replaced the previous IDW St/HFA 2/1995.
Embedding IDW S 13 in civil and tax law
IDW S 13 addresses business valuations used to determine compensation or settlement claims in property-related disputes under family and inheritance law. Relevant situations include matrimonial property disputes, compulsory-share claims and inheritance disputes.
The standard must be considered together with the applicable civil-law provisions. It also expressly distinguishes these valuations from inheritance-tax valuations. For inheritance-tax purposes, the relevant provisions of the German Inheritance Tax Act (ErbStG) and Valuation Act (BewG) apply instead.
Specification of IDW S 1, not an exception to IDW S 1
IDW S 13 does not establish an alternative valuation system. The first stage remains an objective business valuation based on the principles of IDW S 1. IDW S 13 then adds a second stage in which the resulting business value is reconciled with the specific compensation or settlement claim.
This two-stage approach can be summarized as:
- Determine the objective business value according to the applicable valuation principles.
- Reconcile the business value with the specific claim, taking the legal and economic circumstances of the family or inheritance dispute into account.
This distinction is central to applying IDW S 13 correctly.
Special features when determining the objective business value
IDW S 13 introduces several considerations that are particularly relevant to family- and inheritance-law valuations.
Two valuation dates
In matrimonial property disputes, both the initial and final assets may need to be valued. The valuer therefore has to determine the relevant business values at the respective valuation dates rather than simply applying today’s information retrospectively.
Consistency between initial and final valuations
The initial and final assets should be valued using consistent valuation principles. This is important when measuring the change in business value over a longer period. Changing the valuation methodology between the two dates can distort the resulting compensation claim.
Historical information and hindsight
Historical valuation dates often involve incomplete documentation. The valuer must reconstruct the information that would have been available at the relevant date and avoid incorporating subsequent developments simply because they are known today.
IDW S 13 specifically addresses the difficulties associated with limited information for historical valuation dates.
Transferable earning power
For owner-managed SMEs, not all earnings necessarily represent transferable earning power. If business performance depends substantially on the individual owner, the valuer may need to distinguish between earnings that could be transferred to a hypothetical successor and earnings attributable to the owner’s personal contribution.
Imputed entrepreneurial salary
The appropriate entrepreneurial salary can also be relevant, particularly for owner-managed SMEs. An economically appropriate remuneration for the owner’s management activities may need to be reflected when determining sustainable earnings and therefore the business value.
✅ For a deeper discussion: Special Features of IDW S13 in Business Value Assessment.
Reconciliation from business value to the compensation claim
The second stage of IDW S 13 addresses how the objective business value is translated into the claim relevant to the family or inheritance dispute.
Deferred and personal tax effects
Where the valuation involves a presumed sale, the associated tax consequences may affect the value. IDW S 13 therefore addresses the relevance of income-tax effects and deferred taxes in the reconciliation process.
Restrictions on disposal
Contractual or other restrictions can affect the value of a shareholding in specific circumstances. IDW S 13 requires such effects to be assessed based on the circumstances of the individual case rather than through unsupported blanket discounts.
Financing of compensation payments
The financing costs associated with paying a compensation or settlement claim must be distinguished from the value of the business itself. The ability to finance the claim therefore represents a separate consideration in the reconciliation process.
Monetary devaluation
When initial and final assets are compared over several years, they must be placed on a comparable price basis. IDW S 13 therefore addresses the treatment of monetary devaluation when determining the relevant change in wealth.
✅ For the detailed reconciliation issues: Special Features of the Reconciliation of Company Value in IDW S13.
Why IDW S 13 matters in valuation practice
The importance of IDW S 13 lies in separating two questions:
What is the objective value of the business?
and
What compensation or settlement claim follows from that value under the applicable legal framework?
Keeping these stages separate makes the valuation more transparent, reproducible and easier to review. It also prevents legal considerations belonging to the reconciliation stage from being incorporated prematurely into the underlying objective business value.
Wrap it up!
IDW S 13 provides a specific framework for business valuations used to determine compensation and settlement claims in family and inheritance law. It does not constitute an alternative to IDW S 1. Instead, it specifies the valuation process for these particular occasions and adds a second stage for reconciling the business value with the legally relevant claim.
For valuation professionals, the key considerations include consistent treatment of valuation dates, careful handling of historical information, transferable earning power, appropriate entrepreneurial remuneration, tax effects and a transparent reconciliation of the business value to the compensation or settlement claim.
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Reference
- IDW S 13 – Besonderheiten bei der Unternehmensbewertung zur Bestimmung von Ansprüchen im Familien- und Erbrecht. 6 April 2016. https://www.idw.de/idw/idw-verlautbarungen/idw-s-13.html
- IDW – Current list of IDW pronouncements. https://www.idw.de/idw/idw-verlautbarungen/aktuelle-liste
Updated at 18 August 2026.
