Independent, defensible business valuations — tailored to your needs

There is no single formula. Most business valuations apply one or more of three recognised approaches: an income approach (such as capitalisation of future maintainable earnings or discounted cash flow), a market approach (comparable sales and earnings multiples), and an asset approach (net assets).

For owner-operated Australian businesses, capitalising future maintainable earnings is the most common method.

The appropriate method, earnings base, and multiple depend on your industry, size, risk profile and the reason for the valuation, which is why a considered engagement gives a more reliable figure than a rule of thumb.

The three main methodologies are the income approach, the market approach and the asset approach. The income approach values the business on its capacity to generate future earnings or cash flow. The market approach references multiples paid for comparable businesses. The asset approach values net tangible and intangible assets. A full valuation will consider more than one method and reconcile the results, rather than relying on a single number.

Businesses are commonly valued as a multiple of earnings (often EBIT or future maintainable earnings), but there is no universal multiple. Multiples vary widely by industry, business size, growth, customer concentration, owner reliance and risk. A small, owner-dependent business typically attracts a lower multiple than a larger business with recurring revenue and a capable management team. We assess the drivers specific to your business rather than apply a generic figure.

The fee depends on the engagement level and the size and complexity of the business. A Calculation Engagement is the most cost-effective option and is offered on a fixed fee. A Limited Scope Valuation is also typically fixed-fee. A Full Valuation may be fixed or staged, reflecting the additional analysis and reporting involved. We provide a tailored quote before any work begins, so there are no surprises 

It depends on the level engaged. A Calculation Engagement provides an indicative value range based on agreed procedures and limited information. A Limited Scope Valuation adds analysis of key value drivers, risks and methodologies within a defined scope. A Full Valuation includes detailed financial and commercial analysis, multiple methodologies, industry, market and risk assessment, and a comprehensive written report with clearly supported assumptions and conclusions.

Online calculators can give a rough indication, but they cannot account for the specific earnings quality, risk, assets and market conditions that determine real value — and they carry no professional standing. For any decision that matters, such as a sale, a buy-in or a tax position, an indicative value or formal valuation prepared by a CPA gives you a figure you can actually rely on.

It depends on the purpose. Where a valuation is incurred in carrying on your business to produce assessable income, it may be deductible under section 8-1 of the ITAA 1997. Where it relates to a capital transaction such as selling the business or shares, it is generally capital in nature and may instead form part of the CGT cost base under the cost-base rules in the ITAA 1997. Treatment turns on your facts, so we recommend confirming the position as part of the engagement. This is general information, not specific tax advice.

The levels differ by rigour and the reliance that can be placed on the outcome. A Calculation Engagement is an indicative estimate for internal use only. A Limited Scope Valuation is a defined-scope engagement suitable for moderate reliance, such as a negotiation or restructure. A Full Valuation is prepared to applicable professional standards and is the appropriate level where the conclusion must withstand external scrutiny — for transactions, disputes, tax and financial reporting.