What Is My Business Actually Worth?
If you own a private Australian business, the truthful answer is not a number: it is a range. For most Australian private businesses, the honest answer is a range: and the evidence behind the range is worth more than the number. Unlike listed shares, your business has no live market price. Its value has to be estimated from its earnings, its assets and what comparable businesses have changed hands for, and every one of those inputs involves judgment. Two competent valuers working from the same accounts will usually land close to each other, but rarely on the identical figure. That is why a defensible valuation states a supportable range, sets out the assumptions behind it, and shows the evidence for each one. A single-point figure with nothing behind it convinces nobody: not a buyer, not the ATO, not a court. A well-evidenced range, with the reasoning on display, is what all three actually engage with. The rest of this guide explains what puts you at the top of your range rather than the bottom, and how to find out where you sit.
What Decides Where You Sit in the Range?
- ·Earnings quality and size. Larger, steadier profits earn stronger pricing than small or volatile ones: and clean, well-kept financials make every other driver on this list easier to prove.
- ·Owner dependence. A business that runs on your relationships, your licences and your unpaid hours is worth less to a buyer than one with systems and a team that operate without you. This is the single driver owners most often underestimate.
- ·Customer concentration. If one or two customers supply most of your revenue, a buyer is pricing the risk that they leave the day you do. A spread customer base sits higher in the range.
- ·Growth trajectory. A business with credible, funded growth ahead of it is worth more than one that has plateaued, but only if the forecast survives scrutiny. Hope is not a valuation input; evidence is.
- ·Transferability. The lease, licences, key contracts and staff must be able to move to a new owner. Anything that cannot transfer cannot really be sold, and it gets priced accordingly.
How Do Valuers Actually Work Out the Number?
Almost every business valuation in Australia draws on three method families, chosen to suit the business rather than applied by default. Multiples of normalised earnings suit trading businesses with an established profit history: the valuer works out what the business genuinely earns for its owner, then applies a multiple supported by evidence of what comparable businesses change hands for. Discounted cash flow takes over where growth and forecasts dominate, a business investing ahead of its earnings, or one whose future looks very different from its past, and values the cash the business is expected to generate, discounted back to today to reflect risk and time. Net assets applies where the business is asset-heavy or underperforming: when the equipment, property or stock is worth more than the earnings justify, value rests on what the assets themselves would fetch. A careful valuer will often run more than one method and explain why the conclusion leans where it does. But the method is rarely where valuations are won or lost. The real contest is over the inputs: and above all, the earnings figure the multiple is applied to.
Why Do Normalised Earnings Matter More Than the Multiple?
Owners fixate on the multiple. In practice, for most small and mid-sized Australian businesses, the number that moves the valuation furthest is the earnings figure underneath it. Normalising earnings means restating profit the way a buyer would see it: replacing the owner's actual salary with a market rate for the role: whether you pay yourself too much or too little; stripping out genuine one-offs such as an insurance event, a legal dispute or a once-only contract; and adjusting family wages to what the same work would cost at arm's length. Personal expenses run through the business come out too. Every adjustment shifts the earnings base, and because the multiple is applied to that base, every dollar of adjustment is multiplied in the final figure. This is also exactly where valuations get challenged. A buyer's accountant, the ATO or an opposing expert will test each add-back one by one, so each one needs a reason and a paper trail. The multiple gets the attention; the add-backs decide the outcome.
Why Do Free Calculators, Broker Appraisals and Formal Valuations Disagree?
Because they are built to do different jobs. A free online calculator applies a generic formula to whatever figures you type in: it cannot normalise your earnings, test your customer concentration or weigh your lease, so it returns a broad estimate at best. A broker's appraisal is prepared by someone who earns their fee when your business sells; that is a legitimate job, but it is not an independent one, and appraisals are commonly framed around winning a listing rather than defending a number. A formal valuation is different in kind: it is prepared by an independent valuer with no stake in whether you sell, it sets out its evidence and assumptions in full, and it is signed by the valuer who stands behind it. None of these is dishonest, they answer different questions. The calculator answers "roughly what ballpark?". The appraisal answers "what might we list it for?". The valuation answers "what can be defended?". Trouble only starts when an answer to the first question is used to settle the third.
Does the Same Business Have a Different Value for Different Purposes?
The market value of your business does not change with the purpose: but the standard of evidence you need certainly does. If you are simply curious, a well-reasoned range is enough. If you are negotiating a sale, you need a figure you can hold under pressure from a buyer's advisers. If the valuation supports a tax event, a restructure, a share transfer, a capital gains calculation, it needs to be prepared with the ATO's market valuation guidance in mind, because valuations that look thin invite questions. And if the number will be contested, in a partnership exit or a family law matter, it must withstand an opposing expert reading it line by line. One caveat that matters: an independent valuer establishes the value; how that value is treated for tax stays with your accountant or adviser. A valuation is evidence, not tax advice: and no valuation, from any firm, is "ATO-approved".
What About My Industry?
Every industry weighs the drivers differently, which is why a generic answer only goes so far. A childcare centre is assessed on its licensed places and occupancy. A gym lives or dies on membership retention. Cafes and restaurants are judged on whether the margin survives a change of owner. Dental practices turn on practitioner dependence and patient recall. E-commerce businesses are tested on customer acquisition costs and platform risk. The mechanics of the answer, normalised earnings, method choice, evidence, stay the same everywhere, but what pushes a business to the top or bottom of its range shifts with the sector. We maintain a full series of industry-specific guides covering exactly this, including childcare centres, gyms, cafes and restaurants, dental practices and e-commerce businesses, each walking through the drivers buyers in that sector actually price. If your industry is on the list, read the general answer here first, then the specific one.
What Will You Need to Show a Valuer?
- ·Financial statements: usually the last few years of profit and loss statements and balance sheets, so the valuer sees the trend rather than a single snapshot.
- ·The detail behind the add-backs: your salary and drawings, family wages, one-off costs and any personal expenses run through the business, each with enough paper to stand up later.
- ·The customer picture: enough revenue detail to show how concentrated, or how spread, your income really is.
- ·The transfer terms: the lease, key contracts, licences and anything else a new owner would need to take over on day one.
- ·Your own honest account of the business: what only you can do, what the team handles without you, and what is genuinely repeatable in someone else's hands.
How Do I Find Out What My Business Is Worth?
Match the tool to the decision in front of you. If you are curious, start with our free indicative range tool: it will not replace a valuation, but it frames the conversation and costs you nothing. If your accountant or lawyer referred you, take 10% off. Whatever the level, the goal is the same: a range you can defend, built on evidence you can show. Oliver Group's fees are set by the annual turnover of the business: a Small Business Valuation is $1,495 + GST for turnover under $2 million, a Medium Business Valuation is $2,495 + GST for turnover between $2 million and $10 million, and a Large Business Valuation is $3,495 + GST for turnover over $10 million. Small-business reports are delivered in 2 business days and medium-business reports in 3 business days; the delivery date for a Large Business Valuation is agreed before commencement. Delivery time starts once payment and all required information have been received. Retrospective valuation dates are +$495 each and additional entities are +$795 each. The fee is fixed in writing before work begins and never depends on the concluded value.