Jimmy Choo, Peter Som, and Valentino did it in private equity deals last year. Prada and Salvatore Ferragamo have been hoping to do it in initial public offerings this year. The new trend in high-end fashion? Selling not just clothes, handbags, and shoes, but the company itself. Yet the one that moguls would love to get their hands on—Chanel—shows no sign of being for sale. Brothers Alain and Gérard Wertheimer of Paris tightly control the legendary fashion house, which boasts 151 boutiques and offers everything from the iconic No. 5 fragrance to contemporary versions of founder Coco Chanel’s pioneering little black dress. A Chanel blouse can cost about $3,000, but the company’s value is far less clear. We asked a handful of investment bankers—including Gilbert Harrison and Robin Andrea Harris, founder and vice president, respectively, of the fashion-industry investment firm Financo, and Mitch Hara, a managing director in Peter J. Solomon Co.’s mergers-and-acquisitions group—to help us come up with a guesstimate.

Step No. 1—Handbags, Heels, and the Little Black Dress

Fashion finance gurus believe Chanel’s annual revenue runs between $2.3 billion and $3 billion. But because Chanel’s financials are private, the best clues to its overall value must be gleaned from comparable public companies. Most experts say the best one to look at is Hermès—another revered European brand and a family-controlled player that’s not fond of licensing out its name. (Chanel has only one licensing deal.) Since Hermès isn’t active in the cosmetics business, it’s useful only in valuing Chanel’s fashion side, which is believed to account for about 50 percent of the company’s revenue (or between $1.1 billion and $1.5 billion). Hermès is worth 17 times its earnings before interest, taxes, depreciation, and amortization. Do some eighth-grade algebra to apply Hermès’ margin (30 percent) to Chanel’s revenue, and voilà!

Estimated value of Chanel's fashion business: $5.6 billion to $7.7 billion

Step No. 2—No. 5 and Beyond

Things aren’t as straightforward with the other half of Chanel’s business—perfume and cosmetics—because there is no one ideal company to compare it with. Our investment-banking sources suggest that the best way to appraise Chanel’s beauty business is to take an average of the figures from some top competitors: Clarins, Estée Lauder, and L’Oréal. Apply their average cash flow margin—16 percent—to the other 50 percent of Chanel’s revenue, and the resulting range is $180 million to $240 million. Because, unlike our amalgam of cosmetics companies, Chanel is a luxury-goods business, our sources suggest multiplying that range by 17, Hermès’ multiple. 

Estimated added value: $3.1 billion to $4.1 billion

Step No. 3—The Crystal Ball

Simple addition of the figures calculated in the two preceding steps suggests that Chanel may be worth between $8.7 billion and $11.8 billion (average of $10.3 billion). But those calculations were performed using values from today’s strained marketplace. From last year’s peak, the average luxury-goods stock is off 40 percent. Because Chanel is, well, Chanel, some in the industry believe that its value may hold up better. “Take one C, interlock it with another C, and what you have is priceless,” says Marshal Cohen, chief analyst at NPD Group, a market research company. That may be hyperbole, but Chanel is arguably the single most valuable fashion brand. Anticipating a future in which the economy is stronger and more customers can afford a thousand-dollar belt, Chanel may be worth significantly more. So some analysts argue that it’s appropriate to boost our results by about 25 percent.

Estimated added value: $2.2 billion to $3 billion

THE BOTTOM LINE How hard will Chanel be hit by the forces battering its luxury competitors? If you think Chanel is no different from the others, its value is probably around $10 billion. If you think it’s uniquely positioned, the number is closer to $15 billion. 

Estimated value of Chanel: $10.3 billion to $14.8 billion