Definition and general overview of the term ‘Multiple’
The term ‘Multiple’ originates from Latin (multiplex = manifold, multipart) and, in a legal context, refers to the multiple or manifold manifestation of a fact, legal relationship, or concept. The concrete interpretation and significance of ‘Multiple’ varies depending on the branch of law. The designation is primarily used in commercial, corporate, tax, and medical law, but it also finds application in other legal fields. The following outlines the key legal aspects and practical relevance.
Multiples in Corporate Law
Multiple as a financial metric
In corporate law, ‘Multiple’ often refers to a metric (multiplier) used for valuing companies or company shares. The ‘multiples approach’ has become established particularly in the context of business valuations. In this method, earnings, revenue, or profit figures are multiplied by industry-standard multipliers (multiples) to arrive at a company value.
Legal significance of the multiples approach
The multiples approach is not based on a fixed statutory legal basis but has been developed as a recognized tool for business valuation through case law and legal literature. It can be particularly relevant in corporate disputes, for example in connection with shareholder compensation, valuation of company shares in the event of divorce, inheritance, or restructurings. Courts resort to these methods when the valuation in a specific case should be oriented towards customary market prices.
Critical legal aspects
- Transparency and verifiability: The application of the multiples approach requires that the multipliers used are transparent and relate to comparable companies. The choice of metrics and multipliers can itself become a contentious issue.
- Relationship to statutory valuation methods: Statutorily regulated valuation methods (such as the capitalized earnings method under Section 199 of the Valuation Act for tax purposes) generally take precedence over the multiples approach, but can be supplemented by it.
- Relevance for arbitral appraisals: In corporate law disputes, arbitral appraisers under Section 317 of the German Civil Code (BGB) use multiples to assess an appropriate valuation amount.
Multiples in Tax Law
In tax law, multiples are primarily used in the context of valuing unlisted company shares. The tax authorities recognize multiples as useful tools to verify the plausibility of company values, for example when determining fair market values for inheritance and gift tax purposes.
Case law on the use of multiples
Courts examine the appropriateness of using multiples, particularly in light of the principle of equality and the tax valuation law. Emphasis is placed on ensuring that multiples come from the relevant market environment and that the valuation date is observed.
Multiples in Medical Law
The term ‘Multiple’ appears in medical law in regulations concerning the diagnosis and classification of certain medical conditions. Most commonly, this refers to ‘multiple sclerosis.’ Legally, these diagnoses are relevant in social law (for example in the recognition of disabilities, pension entitlements, or in disability proceedings).
Social and insurance law classifications
Decisions regarding the degree of disability (GdB) or the granting of benefits under SGB IX depend, among other things, on the diagnosis of multiple sclerosis. The prerequisites and evidentiary requirements for recognition are specified in administrative instructions, supreme court rulings, and medico-legal expert opinions.
Multiples in Securities Law and Financial Market Law
In securities law and related areas of banking supervision, ‘Multiple’ also refers to price ratios and valuation factors, for example, when structuring or valuing financial products (‘multiples on earnings per share’). Disclosure and publication obligations for issuers (e.g., under the EU Prospectus Regulation) in some cases also require selected ‘multiples’ to be disclosed in order to provide investors with transparent decision-making foundations.
Multiples in Intellectual Property Law
In industrial property protection, particularly trademark and patent law, the term ‘Multiple’ can arise in the context of multiple protection, parallel applications (‘multiple registrations’), or the cumulation of rights. The legal permissibility and scope of such multiple rights depend on the respective area of protection and international context.
Legal special features and disputes
Interdisciplinary issues
The use of multiples, especially in valuation law, can lead to disputes. This affects not only the determination of company values but also judicial recognition of certain medical diagnoses with legal consequences.
Procedural aspects
The use of multiples in court proceedings regularly requires detailed documentation and verification by the experts involved. Procedural rules on expert evidence and judicial conviction may also be affected.
International references
Especially in international tax and corporate law, multiples are recognized valuation tools. International accounting standards such as IFRS or US-GAAP explicitly provide for the use of multiples for ‘fair value’ assessments. In the context of treaties, this can be decisive for the definition of transfer prices and taxable values.
Summary
The term ‘Multiple’ is a legally multifaceted term with different meanings in various areas of law. Its primary function is as a valuation multiplier in corporate and tax law, but it is also a specialist term in medical and intellectual property law. The legal classification always depends on context. The requirements for transparency, traceability, and comparability developed in case law, legislation, and administrative practice are key prerequisites for using the term ‘Multiple’ in its respective form.
Frequently Asked Questions
Who is liable when acquiring or using multiples in a legal sense?
When acquiring and using multiples, the seller is generally liable if they violate statutory provisions of copyright law, trademark law, or art law. In Germany, this is governed in particular by the Copyright Act (UrhG), the Art Copyright Act (KUG), and the Civil Code (BGB). If the seller (for example, a gallery owner or artist) knowingly or unknowingly sold the buyer a forged or unlawfully reproduced multiple, they may be liable for damages. The buyer should therefore protect themselves legally when purchasing by demanding a provenance statement and a certificate of authenticity. At the same time, the purchaser must ensure that further use, such as public exhibition or resale of the multiple, complies with the rights of the artist and third parties. Otherwise, the user may also be held liable.
What statutory protection mechanisms apply to trading multiples?
The protection of multiples in commercial transactions is primarily ensured by copyright law. The right of reproduction and distribution belongs solely to the author (typically the artist) unless usage rights have been explicitly transferred. Any trade in multiples requires a legal foundation—often in the form of a license agreement between artist and producer or marketer. Consumer protection rules (Sections 312 et seq. BGB), product labeling regulations, and rules on the protection of cultural property are also relevant. Internationally, agreements such as the Washington Convention on the Protection of Works of Art and the UNIDROIT Convention on the international transfer of cultural goods must also be observed.
To what extent do copyright limitations apply to the public presentation of multiples?
Copyright grants the creator of an artwork extensive control rights over the public display of their work (Section 19a UrhG). Therefore, even ownership of a multiple requires distinguishing between property rights (ownership of the physical object) and the rights remaining with the author. For museums, galleries, or private collectors, the freedom to exhibit is limited to the restrictions imposed by the Copyright Act (e.g., Sections 44a ff. UrhG concerning temporary reproduction) and any rights of use that may have been granted. Without such rights, publishing a multiple can constitute a copyright infringement and lead to injunctive relief, disclosure, and damages claims.
What legal particularities apply to the resale of multiples (resale right or droit de suite)?
According to Section 26 UrhG, visual artists in Germany are entitled to a resale right when original works of visual art are resold through an art market professional (such as an art dealer or auctioneer). Multiples can also fall under this regulation if they qualify as works of visual art under copyright law. In such cases, the seller must pay the author a percentage of the resale proceeds. This regulation protects the artist’s economic interests after the first sale of the work and ensures their participation in any appreciation in value.
What precautions must be taken when importing and exporting multiples?
The international movement of multiples can be subject to a complex web of civil, criminal, and administrative regulations. Many countries require an export permit for cultural goods of certain value or age classes (e.g., under the German Ordinance on the Protection of Cultural Property and EU Regulation No. 116/2009). Upon import, corresponding provenance documents should be presented to prove lawful acquisition. Failure in this area can lead not only to confiscations and fines but also to criminal investigations for illegal trafficking in cultural property.
What legal challenges exist in contracts concerning editions or multiples between artists and publishers?
Contracts for the production and distribution of multiples regularly govern matters of rights assignment, edition size, numbering, remuneration, marketing, and possible recall rights. These contracts are subject to Section 31 UrhG and should, in particular, clarify which usage rights are transferred to the publisher and which remain with the artist. Disputes often arise from subsequent exceeding of agreed editions, unclear provisions on reprints, or lack of documentation about the whereabouts of the copies. To avoid protracted legal disputes, it is advisable to have a contract drafted and reviewed by a lawyer.
How is the authenticity and legal legitimacy of a multiple proven in court?
In case of dispute, proving the authenticity and legality of a multiple in court is of central importance. Typically, such proof is provided by expert opinions from recognized art experts, provenance documentation, and certificates of authenticity. Documentation of uninterrupted chain of custody and submission of invoices, contracts, and other documents can also be decisive. If such proof is lacking, the court may rule against the holder; in the worst case, restitution claims by the rightful owner or claims for damages by the creator or their successor may result.
