What is the difference between a broker appraisal and a business valuation?

Two figures, two different jobs

Both give you a number, so they are easy to confuse. The difference is in who prepares the figure, what question it answers and what you can do with it afterwards.

Why the difference matters

A broker appraisal can be a genuinely useful sales tool. Brokers see real buyers and real offers, so their sense of what the market will pay right now has value. But a broker usually earns a commission on the sale price, so the appraisal is part of winning and running a sale. That is not a criticism. It simply means the figure was not prepared as an independent opinion, and it may not show how it was reached.

A valuation starts somewhere else. The valuer agrees the purpose, the exact interest and the date first. They then adjust the earnings for one-off and private items, choose a recognised method, test the result against other evidence and explain the reasoning in writing, so a buyer, co-owner or adviser can follow how the figure was reached. A share valuation also accounts for the company's cash and debts, which an asset sale price leaves out.

This matters most for tax. The ATO's market valuation guidance says the acceptability of a valuation usually depends on the process behind it: a suitably knowledgeable and objective valuer, a recognised method and credible evidence. It also expects a valuation report to declare the valuer's independence and any conflicts of interest. The taxpayer stays responsible for the figure, and the ATO may review it. An appraisal prepared to win a listing may not meet that standard.

Which one do you need?

If you are thinking about selling and want a feel for the market, a broker appraisal may be enough at that stage. A valuation is usually the better fit when the figure has to stand on its own:

• A capital gains tax calculation, including market value at 30 June 2027 for individuals and trusts affected by the 1 July 2027 changes. An apportioning method may be an option once one is made, and your tax adviser decides what suits you.
• Buying out a shareholder or partner, or bringing a new one in.
• A restructure, or passing the business to family or staff.
• Checking whether an asking price or an offer is realistic before you sell or buy.

Some owners use both: an independent valuation to understand what the business is worth, then a broker to test the market and find a buyer.

Independent Business Valuation prepares independent valuations of businesses and business interests. Each report is prepared by a suitably qualified business valuer at Valuo, who is paid a fixed fee and has no stake in a sale. We charge one fixed fee of $999 + GST for a full valuation report on one business or ownership interest with annual turnover under $10 million. The fixed fee applies once we confirm the interest, purpose, structure and records fit the fixed-fee scope. Anything outside it is quoted in writing before we start.