Executive answer
A related-party share sale needs an arm’s length price and documentation explaining exactly what transferred. Multiplying EBITDA by a multiple or adopting book value is insufficient. The review considers the interest’s rights, percentage, control, restrictions, valuation date, currency, payment terms, available information and realistic options of buyer and seller.
Valuation is one part of the file, not the entire file. Agreements, approvals, business purpose, before-and-after structure, contemporaneous forecasts, assumptions and execution must tell one story. Tax treatment also depends on residence, asset location and nature, treaty provisions and the specific transaction form.
Research and verification cutoff: August 2, 2026. This material is informational and does not replace transaction-specific tax or legal advice.
Define the transaction before value
Identify seller, buyer, issuer, share class, percentage, voting, dividend, liquidation, conversion and restriction rights. Determine whether the package transfers control, significant influence, an illiquid minority or special rights. Two interests in the same issuer can have different per-share values.
Document whether the sale stands alone or forms part of a larger restructuring. Debt, dividends, licenses, terminations, contributions or functional transfers may accompany it. Valuing only shares without separating connected transactions can duplicate or omit value.
Valuation date
Value belongs to a date aligned with agreement or transfer and information reasonably available then. A later report may use subsequent data only under a clear rule distinguishing confirmatory evidence from previously unknown facts.
Preserve forecasts, plans, minutes, offers, reports and market data with timestamps. Replacing a forecast because actual results differed introduces hindsight. If closing is conditional, document which party bears risk between signing and completion.
Business purpose
Explain why the sale occurs: simplification, investor entry, separation, centralization, funding, succession or restructuring. A commercial motive does not prove market price, but informs options and terms.
Board materials should align with valuation. If management expects significant synergies while the model ignores them, explain the difference. If losses motivate the sale, distinguish real impairment from transfer of future opportunities.
Financial statements and data quality
Begin with reconciled historical statements, debt, cash, working capital, contingencies, capital expenditure and nonrecurring items. Review accounting policies, related-party transactions and segmentation. Reconcile every adjusted EBITDA item to the ledger.
Challenge forecasts against budgets, capacity, agreements, market and prior performance. Growth and margin assumptions need more than mathematical convenience. Each material input should have a source, owner, date and sensitivity.
Discounted cash flow
A DCF estimates cash flows accessible through the interest and discounts their risk. Define horizon, terminal value, currency, inflation, tax, investment, working capital and discount rate. Treat debt and cash consistently with the chosen flow.
Spreadsheet precision does not remove uncertainty. Present base, downside and upside scenarios, expose key drivers and prevent terminal value from dominating without support. Cross-check the result against market evidence.
Market multiples and transactions
Public multiples need comparability in activity, size, geography, growth, risk, capital and date. Explain inclusions, exclusions and debt adjustments. A sector average without analysis is not sufficient.
Transaction multiples can include control premiums, synergies and terms that do not apply. Review percentage acquired, competitive process, timing and contingent consideration. Limited information justifies a range, not invented accuracy.
Asset approach
An asset approach may suit holding, real estate, investment or non-going-concern entities. Adjust assets and liabilities appropriately and identify contingencies. Book value is a starting point rather than a synonym for market value.
Unrecorded intangibles or other property require consideration. Holding costs, latent taxes, lack of control and similar factors may matter only when evidence supports them; do not apply mechanical percentages.
Control and minority rights
A controlling interest may direct strategy, dividends, management and property. A minority may lack those powers and face illiquidity. Control premiums and discounts are not automatic; rights and evidence determine them.
Read bylaws, shareholder agreements, vetoes, quorums, options and exit rights. A 49% package with substantive vetoes differs from another minority. Value the actual legal and economic package.
Synergies
Identify synergies, who can realize them and whether independent parties would pay for them. Not every group synergy belongs to the seller. Some exist only for the buyer; others already belong to the business.
Avoid including synergies in forecasts and adding them again as a premium. Document owners, costs, timing and probability. Internal presentations provide useful evidence but require critical reading.
Request a Related-Party Share Sale Review to test rights, assumptions, method and consequences before setting price or signing.
Debt, cash and financing
State whether price begins with enterprise or equity value and prepare a bridge. Classify debt, debt-like items, cash, working capital and unusual liabilities. Contractual definitions must match the model.
If the buyer owes the purchase price, a separate related-party financial transaction arises. Analyze currency, term, rate, security, repayment capacity and conduct. Share valuation does not price financing.
Contingent consideration
Earn-outs, closing adjustments and conditional payments alter risk. Define metrics, period, governance, audit and dispute resolution. Expected value should consider probability and discount while remaining distinct from the amount eventually paid.
Metrics need protection from manipulation through later intercompany dealings. If the buyer controls pricing, costs or dividends that determine an earn-out, the seller needs safeguards comparable to an independent negotiation.
Currency and exchange rate
Currency should align with cash flows, risks and agreement. Document exchange-rate date and source and who bears movement between signing and closing. Do not mix nominal cash flows with real rates or incompatible inflation.
For installments, model each payment. A simple conversion at signing can ignore financing and currency exposure.
Tax and treaties
Before execution, confirm residence, source, tax basis, gain, withholding, filings, potential authorizations and treaty. Direct and indirect transfers may differ. Do not assume treaty benefits without checking requirements.
Tax advice should coordinate with valuation but not dictate its economics. If law requires a specific reference, explain its integration. Retain certificates, ownership structure and beneficial-owner evidence where relevant.
Governance and approval
Separate preparation, review and approval. Valuation, tax, legal and finance professionals review their areas; the board receives range, assumptions, sensitivities, conflicts and recommendation. Related parties should record management of conflicts.
A decision log captures versions, questions and changes. If final price departs from the range, explain the rights or terms supporting it. Approving only one number weakens evidence of informed judgment.
Agreement and execution
The agreement states shares, price, currency, date, adjustments, representations, conditions, covenants and dispute resolution. It must align with the model and approvals. Schedules identify certificates and structure.
After closing, reconcile payment, journals, title cancellation or registration, filings and new ownership. Resolve and document outstanding conditions. Execution proves the transaction moved beyond paper.
Minimum file
Retain before-and-after charts, bylaws, shareholder agreements, sale contract, approvals, financials, dated forecasts, sources, model, comparables, sensitivities, tax opinion, payments and registrations. Add an index and owners.
The executive summary answers what was sold, included rights, date and method, range, price selection and remaining obligations. Link each conclusion to evidence.
Review workflow
Begin with a transaction memo before management selects a price. Freeze the information set, identify connected transactions and agree the valuation date. The valuator builds methods while legal confirms rights and tax maps consequences. A cross-functional challenge session tests assumptions, alternatives and consistency with board materials.
Before signing, update only for information legitimately available and record each change. At closing, test conditions, price mechanics and funding. After closing, compare execution with the approved model and archive final evidence. This sequence prevents a report written afterward from becoming a reconstruction of decisions that were never documented.
Illustrative example
Sensitivities the board should understand
The board should not approve a number without seeing its drivers. Present sensitivity to growth, margin, capital expenditure, working capital, discount rate, terminal value, exchange rate and date. Show combinations as well, because simultaneous margin and growth deterioration can matter more than a single-variable movement.
Sensitivity does not replace the range; it reveals fragility. If small changes create extreme movement, acknowledge uncertainty and consider contractual tools such as contingent consideration. When terminal value dominates, revisit the explicit forecast and cross-check the exit assumptions against market evidence.
Due diligence and contingencies
Valuation should incorporate due-diligence findings consistently. Litigation, labor obligations, taxes, warranties, customer concentration, licenses and environmental commitments may affect flows or debt. Classify each finding by probability, amount, timing and treatment in price or agreement.
Avoid counting a contingency once in cash flows and again as debt. A findings matrix should show where each item enters and who approved it. Where the contract provides an indemnity, explain whether residual risk still affects value.
External evidence and hypothetical negotiation
Even without an actual independent negotiation, reconstruct what information independents would exchange and what questions they would ask. Third-party offers, financing rounds, earlier purchases, bank valuations and recent transactions can be informative after adjusting for date and rights.
An internal transfer should not be treated as an administrative entry. Buyer and seller can prepare positions, assess alternatives and record concessions. This discipline supports why the selected price falls at a particular point in the range and which terms compensate for differences.
Post-closing review without hindsight
After closing, compare outcomes with forecasts to improve governance rather than rewrite the valuation. Determine whether differences arose from new information, execution or weak assumptions. Preserve the explanation and use it in later transactions.
Where an earn-out or adjustment applies, monitoring also fulfills the agreement. Keep metrics, accounting policies and related-party transactions consistent, and document changes before their final effect is known.
A parent sells an affiliate 70% of a Mexican company with debt, proprietary technology and long-term contracts. Its DCF uses projections approved before the decision, an enterprise-to-equity bridge and scenarios. Multiples cross-check the range. The review considers control, synergies, debt and deferred payment; the contract and board minutes explain why the price sits within the range.
Warning signs
Warnings include unexplained book value, unsupported multiples, later-created forecasts, an ambiguous date, unreviewed rights, standard premiums or discounts, unreconciled debt, duplicated synergies, interest-free deferred price and inconsistent agreements. Omitting a connected transaction is another.
These signs do not determine another value. They show that the conclusion may not be reproducible or defensible.
Conclusion
A defensible share sale values the actual package on the right date with contemporaneous information. Methodology connects to rights, terms, options and execution.
The objective is not a sophisticated number alone. It is evidence that independent parties would have agreed a comparable price and conditions.
Request a Related-Party Share Sale Review before signing to build a coherent value and compliance file.
Verified official sources
- Mexican Chamber of Deputies, current Income Tax Law, including provisions applicable to transfers and related parties.
- SAT, tax treaties and related matters, for cross-border transactions.
- OECD, Transfer Pricing Guidelines 2022.
Verification closed on August 2, 2026. Treatment requires review of facts, residence, rights and applicable law.