Private Company Share Valuations

All of the shares, or only some

The first question in a share valuation is not a number. It is: which shares, held by whom, at what date, for what purpose? Valuing 100% of a company and valuing one holder's 30% parcel are related jobs, but the answers are rarely in simple proportion.

Every share valuation runs in three layers. The business: what the operations are worth, usually based on sustainable profit. The equity: that value plus surplus cash and non-trading assets, less debt and everything the company owes, including to its own shareholders. The parcel: what a buyer would pay for the specific shares, given their rights and the documents that govern them. When only some shares change hands, that last step can matter most.

Control and minority interests

Control is the power to decide. In most private companies, a holder of more than half the votes can usually pass ordinary resolutions, which under many constitutions includes appointing and removing directors: who runs the business, whether profits are paid out and when it is sold. A special resolution, for example to change the constitution, needs at least 75% of the votes cast.

A minority holder has none of those levers, and may wait years for a dividend that never comes. A buyer of that parcel knows this, so would generally pay less per share than the pro rata value of the whole company. That reduction is a discount for lack of control.

• Exactly 50%: neither holder controls, and a deadlock can make both parcels hard to sell.
• A large holding under 50%: may carry real influence if the rest is spread across several small holders.
• A minority with protections: a board seat, veto rights, a put option or tag-along rights can narrow the gap considerably.

We do not reach for a standard percentage. The report sets out which rights the parcel carries, what a realistic buyer would make of them and how that shaped the value. Our article on valuing a minority interest in a private company goes further.

Shares you cannot easily sell

A listed share sells in seconds. A private company share usually cannot. The board may have to approve a new holder, existing shareholders may have the first right to buy, and few outsiders want a slice of a family business. Selling takes time, costs money and may not succeed.

A discount for lack of marketability reflects that, and it is separate from control. A controlling holder can still face a thin market, while a minority holder with a put option (a right to make others buy) may face little marketability risk. The two discounts overlap in places, so a careful valuer checks they do not count the same problem twice.

The shareholders agreement often sets the rules

Read the shareholders agreement and the constitution before anyone talks numbers. Where shares are transferred under that agreement, its valuation clause usually decides the basis of value, which may not be plain market value. Your lawyer interprets the agreement. We value on the basis it sets.

If a clause is unclear or gives an odd result, we raise it before you pay for a report that answers the wrong question.

Different classes of shares

Family companies often have ordinary, non-voting, preference or discretionary dividend shares, sometimes labelled A, B and C class. Each class is valued by its rights under the constitution and terms of issue: who votes, who can receive dividends and at whose discretion, and who gets what on a winding up.

A class with votes and a full share of capital can carry most of the value. A class that receives dividends only at the directors' discretion, with little or no return of capital, may be worth very little on its own, even if large dividends were paid on it in the past. Where classes are tangled, we first table each class and its rights so everyone agrees what is being valued.

Division 7A loans and related-party balances

Money moves constantly between a private company, its shareholders and related entities. These balances can shift share value a long way, so each one is a valuation input.

• Loans to shareholders. Division 7A is a tax integrity rule under which a loan from a private company to a shareholder or their associate may be treated as a dividend unless it is repaid, or put on a complying written loan agreement, before the company's lodgment day. For the valuation the question is commercial: is the loan a real asset, on what terms, and can the borrower pay?
• Loans from shareholders. These are company debts, usually repaid or assigned separately on a sale, so the share price and the loan are two different amounts. Mixing them up is a common error in informal share deals.
• Related trusts and companies. An unpaid trust distribution or an intercompany balance owed to the company is only worth what the debtor can actually pay.
• Related-party rent, wages and fees. Where these are above or below market, we adjust earnings to a market basis.

Why shareholders get their shares valued

On 30 June 2027 in particular, a valuation is one option, not an obligation. The law lets the Government set an apportioning method instead; it is still a draft (released for consultation in August 2026, not yet final), and if it is made, the choice is generally made in the tax return for the year the shares are eventually sold. Your tax adviser decides whether a valuation suits your holding. A valuation as at 30 June 2027 is prepared after that date, once your records to 30 June 2027 are available. You can book your place now.

Family law property settlements are prepared through our dedicated family law practice, Family Law Valuations. A shareholder dispute heading to a court or tribunal needs an expert report, which is a separate engagement quoted in writing.

How the engagement works

1. 01Confirm the parcelThe shares, class, holder, date and purpose, and the agreements that govern a transfer.
2. 02Value the companyUsually on sustainable earnings for a trading business, or net assets for an investment company. Real property held by the company relies on a separate property valuation.
3. 03Bridge to equityDebt, surplus cash, loan accounts and related-party balances as they stood at the valuation date.
4. 04Value the parcelThe basis the agreement sets, or control and marketability for a market value engagement, with every adjustment explained.
5. 05ReportA written report of the interest, date, method, assumptions and reasoning, signed by a suitably qualified business valuer at Valuation Group, after the client signs a letter confirming the information supplied.

The fee follows the company, not the size of your holding: a 10% parcel needs the same analysis of the business as all of it. Each additional parcel, share class or entity is $795 + GST, and each additional valuation date is $495 + GST. 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.