What is a growth share valuation?

A growth share valuation establishes the market value of a separate class of shares that only participate in equity value above a defined hurdle. Because the hurdle is set at (or slightly above) current value, the initial market value is typically modest, allowing employees or contributors to acquire real upside at a low entry cost.

When should we use growth shares rather than EMI?

Growth shares are typically used when EMI is not available, for example because the company exceeds the £30m gross assets test, has more than 250 employees, operates in an excluded trade, or wants to incentivise non-employees such as advisers or non-executive directors. They are also useful for group structures where incentives should track a specific subsidiary.

How is the hurdle set?

The hurdle is typically set at current unrestricted market value plus a defensible margin (often 10-25%). The exact level depends on recent funding evidence, forecast trajectory and the company's specific circumstances. We help calibrate a hurdle that is defensible against HMRC challenge while still delivering meaningful upside.

How long does the valuation work take?

Optival typically delivers an independent growth share valuation within 5-7 working days, reflecting the additional option-pricing modelling required. Urgent timelines can usually be accommodated where needed.

Do growth shares benefit from the same tax reliefs as EMI?

No. Growth shares do not carry EMI-specific reliefs. A Section 431 election is typically made on issue to protect future growth from being taxed as employment income. The wider tax position should be confirmed with a qualified tax adviser.

Growth Share Valuations - UK SMEs

Reward growth without giving away today's value

Independent growth share valuations for UK companies. Defensible hurdle pricing, option-based modelling, and a report your board, auditors and HMRC can rely on.

Option-pricing (Black-Scholes / Monte Carlo)
Hurdle set to survive HMRC scrutiny
Section 431 election support
Refresh on funding or restructuring

Request a Growth Share Valuation View our valuation types

From £2,500

Confirmed in writing

5-7 days

Draft turnaround

Option-based

Defensible methodology

Why founders choose Optival

Rigorous option-pricing analysis, delivered by a senior valuer, at a fee agreed up front.

Defensible Methodology

Option-based modelling (Black-Scholes / Monte Carlo) with transparent assumptions and a clear audit trail for HMRC and future advisers.

Fast Turnaround

Draft report typically within 5-7 working days, so scheme documentation and board approvals can move forward without delay.

Practical Support

Help calibrating the hurdle, aligning with legal drafting and refreshing the valuation when material events occur.

Independent valuation of the growth shares at issue

Defensible hurdle calibrated to current value and recent evidence

Option-pricing modelling with sensitivity analysis

Underlying equity valuation supporting the hurdle

Summary letter to support a Section 431 election

Refresh valuations around funding rounds or further awards

From brief to signed report in 5-7 working days

A straightforward four-step engagement, run by a senior valuer from day one.

Initial Consultation

We discuss the company, participants and scheme objectives to confirm scope, timeline and fee.

Information Gathering

We request financial statements, forecasts, cap table, articles and the intended terms of the growth share class.

Valuation & Option Modelling

We value the underlying equity and model the growth shares as a call option on that equity, struck at the hurdle.

Report & Election Support

We deliver the report and a summary letter suitable to support a Section 431 election and coordinate with legal counsel.

Fixed fee, no surprises

Growth share valuation

Independent report with option-pricing methodology, defensible hurdle, and Section 431 support. Draft delivered within 5-7 working days.

Request a Growth Share Valuation Compare all services

Background

What is a growth share?

A growth share is a separate class of share that only participates in equity value above a defined hurdle. Because the hurdle is typically set at (or slightly above) current market value, the initial market value of the growth shares is modest, but they capture a share of future growth above that level.

Growth shares are widely used by UK private companies that cannot or do not want to use EMI, for example because they have outgrown the EMI thresholds, employ excluded workers, or want to incentivise non-employees such as advisers, non-executive directors or contractors.

An independent valuation at the point of issue is the foundation of the scheme. It supports the price participants pay (often nominal), evidences the modest income tax charge on acquisition, and underpins a Section 431 election where appropriate.

Our Valuation Methodology

Growth share valuations require an option-pricing approach, calibrated to the company's specific circumstances.

Underlying Equity Value

We first establish the unrestricted market value of the ordinary equity using earnings multiples, comparable transactions and DCF as appropriate.

Hurdle Setting

We work with the company to set a hurdle that reflects current value plus a defensible margin, calibrated against the latest funding round or a multiple of current performance.

Option-Pricing Modelling

We model the growth shares as a call option on the underlying equity using Black-Scholes or Monte Carlo, with inputs for volatility, time to liquidity, dividend yield and risk-free rate.

Restriction Adjustments

We apply discounts for lack of marketability and for the rights in the articles and shareholders' agreement (vesting, leaver, drag/tag).

When Growth Shares Fit Best

Common situations where growth shares are the right tool for the job.

Above EMI Thresholds

Businesses that no longer qualify for EMI but still want a tax-efficient scheme.

Companies above the £30m gross assets test
Over 250 full-time equivalent employees
Excluded trading activities under EMI rules

Non-Employee Participants

Advisers, board members and contractors who cannot hold EMI options.

Non-executive directors and advisers
Consultants and long-term contractors
Introducers and strategic partners

Group & Subsidiary Incentives

Where incentives need to track a specific business unit rather than the group.

Subsidiary-level equity for divisional teams
Carve-outs preparing for spin-out or sale
Limiting dilution to genuine future value

Optival provides independent valuation advice. Legal drafting of the growth share class and the wider tax position should be confirmed with your solicitors and tax adviser.