Business acquisition valuation: an independent view before you commit

Why buyers get their own valuation

The asking price comes from the vendor's side. It is often set with a broker whose job is to achieve a sale, and it usually rests on adjusted earnings the vendor prepared. That does not make it wrong. It does make it one-sided.

Your report is prepared by a suitably qualified business valuer at Valuation Group, working for you rather than the vendor or the broker, on a fixed fee that does not depend on whether the deal goes ahead. We start from the records, not the information memorandum.

Engage once you can see the financial statements and before the contract becomes unconditional; ask your lawyer about due diligence and finance conditions. We value; we do not advise. What you offer stays your decision.

Testing the vendor's earnings claims

Private businesses are usually priced on earnings, so the earnings figure matters more than the multiple. Vendors present adjusted profit: reported profit plus add-backs for costs a new owner supposedly will not carry. Some are fair, some hopeful. We test each one.

• Reconcile the accounts to lodged tax returns and BAS. Figures that exist only in a spreadsheet carry less weight.
• Price the owner's labour. If the vendor works 55 hours a week on a token wage, someone has to be paid to do that work after you buy.
• Check the one-off items. A one-off repair that shows up in three of the last four years is a recurring cost.
• Look at related-party costs: rent paid to the vendor's own property trust, family wages, vehicles.
• Separate trend from spike. A strong final year just before a sale deserves questions about deferred spending and invoice timing.
• Ask what it takes to keep the earnings: equipment due for replacement, staff paid below market, marketing that quietly stopped.

What is left is maintainable earnings: what the business can reasonably earn for a new owner, year after year. The multiple then reflects risk. See business valuation methods for how the main approaches work.

Due diligence questions that change the price

Your accountant and lawyer run due diligence; we turn what they find into value. Accountants acting for a buyer can keep the financial due diligence and refer the valuation: see for accountants.

Earn-outs and deferred consideration, in plain terms

When buyer and vendor disagree on value, they often agree on terms instead.

• Deferred consideration: part of a fixed price is paid later, say over two years. In effect the vendor lends you part of the price.
• Earn-out: part of the price depends on performance after settlement, such as revenue or profit over one to three years. It bridges a vendor who believes in next year's growth and a buyer who wants to see it first.

Neither changes what the business is worth today; they change who carries the risk. The question is how much of the price the business supports as it stands, and how much is a bet on the future. A valuation gives you that reference point. Earn-out wording belongs with your lawyer and accountant.

Where a valuation fits with finance

Lenders generally look at whether cash flow can meet repayments and what security sits behind the loan. A business that is mostly goodwill can be harder to borrow against, one reason vendor finance and earn-outs are common in small deals.

If a lender, investor or co-buyer will see the report, tell us when you request a quote, so the addressee and who may rely on it are agreed in writing at the start.

Then test it yourself: maintainable earnings, less loan repayments and a fair wage for you. If little is left, the price may be fair and the deal still wrong for you.

Price allocation and the 2027 CGT changes

The contract usually splits the price between goodwill, equipment, stock and other assets. That split generally sets the cost of depreciating assets and forms part of your CGT cost base, and depending on the state and what is transferred, it may affect duty. A valuation can support the allocation your tax adviser and lawyer settle.

From 1 July 2027, the 50% CGT discount for Australian resident individuals and trusts (including individuals' shares of partnership gains) is generally replaced by cost base indexation for gains that build up from that date, and resident individuals pay at least 30% tax on those gains, with some exceptions. Companies can't use the 50% discount, so the transitional rule for individuals and trusts does not apply to a company's own post-1985 assets.

If you buy before then as an Australian resident individual or through a trust and still hold the business or shares at the end of 30 June 2027, you may be treated as selling just before 1 July 2027 and buying back, by default at market value. A recent arm's length price can be one piece of market evidence of that value, but market value is specific to the valuation date. Whether you need a valuation is for your tax adviser; the law also allows for a Government apportioning method, but that method is still a draft (released for consultation in August 2026, not yet final). See CGT business valuation 2027.

What you receive, fees and timing

A full valuation report on the business, shares or interest you are buying: the subject and date, the method, the earnings adjustments, the key risks and assumptions, and a reasoned conclusion of value. Guided by APES 225 Valuation Services.

The report states what we relied on and could not verify. It is not an audit or due diligence review. A calculation or limited-scope engagement is not a full valuation report; we say which you are getting before you engage us.

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. Larger businesses and groups are quoted in writing. 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. Fixed fee, confirmed in writing before we start. No hourly billing and no surprises.

Delivery: 2 business days for turnover under $2 million, 3 business days for $2 million to $10 million. Delivery time starts once payment and all required information have been received, and pauses while we wait for answers to our questions or your signed representation letter. Deals run on the vendor's timetable as well as yours. Tell us your deadline and we will tell you on the call whether we can meet it.

Documents come only through the secure upload link on your matter, never by email. We can sign a confidentiality undertaking for the vendor first.