A business valuation checklist before you sell

Why start with a checklist

Many owners sell a business only once; buyers and their advisers do it often. A valuation before you go to market helps close that gap: it shows what the business is likely worth to a willing buyer, why, and which parts of the story a buyer will test first. The work you do before the valuer starts decides how quickly the report comes back and how much weight it can carry.

1. Decide exactly what you are selling

This is the question that most often changes a valuation part way through. There are two common ways to sell a private business, and they are valued differently.

• An asset sale: the entity that runs the business sells its goodwill, equipment, stock and contracts. The entity itself stays with you.
• A share or unit sale: you sell your shares in the company, or your units in a unit trust, and the buyer takes over the entity with everything inside it.

Write down which entity owns the business, who owns that entity, and what is in or out of the deal. Cash, owner loans, private vehicles and any real estate are the usual items to settle early. We value businesses and ownership interests, not real estate, so premises need a separate property valuation. If you are selling only some of the shares, say so up front: a minority interest is usually valued differently from the whole.

2. Pull together the financial records

Any valuer, and any serious buyer, starts with the numbers. Gather these first:

• Financial statements for the last three financial years.
• Management accounts for the current year to date.
• Income tax returns for the same years, so the two can be reconciled.
• A fixed asset list showing what is owned, leased or under finance.
• Stock records, with slow-moving items noted.
• Aged debtors and creditors at the latest month end.
• Loans between the business and its owners or related entities.
• A simple budget for the next year and the assumptions behind it.

If your accountant holds most of this, ask them early. Records that arrive in pieces are the most common reason a valuation takes longer than planned. When you engage us, documents come only through the secure upload link on your matter, never by email and never through this website.

3. Adjust the profit for the owner and one-off items

Reported profit in a private business rarely shows what a new owner would earn. Owners often pay themselves in ways that suit their own tax position, run some private costs through the business, or carry one-off costs in a particular year. A valuer adjusts, or "normalises", the profit to reflect the business under a new owner. List anything that would not continue after a sale, with evidence:

• The wage you would pay someone to do your job, compared with what you take.
• Family members paid above or below market, or who would leave.
• Private costs paid by the business, such as a car, phone or travel.
• One-off income or costs: an insurance payout, a legal dispute, a fit-out.
• Rent paid to a related party above or below market rent.

Adjustments can lower the profit as well as raise it. Being realistic now protects you later, because a buyer's accountant will make the same adjustments in due diligence.

4. Document what sits behind the numbers

Buyers pay for earnings they expect to keep. The more you can show on paper, the easier it is to assess the risk, and for a buyer to accept it.

Be honest about how much the business depends on you. If customers call you directly and nobody else knows the suppliers, a buyer will see risk. You can still sell, but it may mean a longer handover, an earn-out, or work now to spread the load.

5. Ask your tax adviser the right questions before you set a price

The price is not the same as what you keep. Before you agree a number, talk to your tax adviser about how the sale will be taxed. We value businesses and business interests. We do not give tax advice, and your tax adviser decides what you need. Questions worth raising:

• Should I sell the business assets or the shares or units?
• Do any of the four small business CGT concessions apply? They continue after 1 July 2027 where the conditions are met, and one test looks at the market value of net assets, so a valuation can be relevant.
• Will the sale happen before or after 1 July 2027, and what does that mean for me?

On that last question: under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, for CGT events on or after 1 July 2027, the 50% CGT discount for resident individuals and trusts is replaced, for the part of a gain that builds up after that date, by cost base indexation and a minimum 30% tax on resident individuals' capital gains. The part built up before 1 July 2027 keeps the 50% discount.

To split the gain, the law treats resident individuals, and trusts with eligible beneficiaries, as if they sold and bought back their assets at market value just before 1 July 2027. That is why the valuation date people talk about is 30 June 2027. An apportioning method may be an option once one is made, and the choice can wait until the tax return for the year the asset is sold.

If your sale may fall after 1 July 2027 and your adviser recommends a market value at 30 June 2027, both values can be arranged in one engagement. 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.

6. Choose the right kind of valuation

Not every number called a valuation is the same. Check these points before you engage anyone:

• Independence. A broker's appraisal is useful for marketing, but the broker usually earns a commission on the sale price. An independent valuer has no stake in the price.
• Scope. A full valuation report sets out the method, evidence and reasoning. A calculation or limited-scope engagement is narrower and is not a full valuation report.
• Purpose and date. The report should state what it is for, the valuation date and exactly what was valued.
• Who signs it. Ask who makes the valuation judgements and signs the report.

If the valuation may also be used for tax, the ATO generally looks at the process behind it: an objective, suitably qualified valuer, a recognised method and credible evidence. The ATO may review any valuation, and the taxpayer stays responsible for it. No valuation can promise acceptance by the ATO or a buyer.

At Independent Business Valuation, every report is prepared by a suitably qualified business valuer at Valuo, who makes every valuation judgement and signs the report. Guided by APES 225 Valuation Services.

7. Plan the timing and the cost

Get the valuation done before you list or open talks with a buyer, so you can set an asking price and answer questions without guessing.

Independent Business Valuation charges one fixed fee of $999 + GST for a full valuation report on one business or ownership interest with annual turnover under $10 million. Delivery is 2 business days for turnover under $2 million and 3 business days for turnover $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. 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. Larger businesses, groups and several interests are quoted in writing.

If you need a second valuation date, for example a current value for the sale and a value at 30 June 2027 for tax, 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. Tell us your deadline and we will tell you on the call whether we can meet it.

The checklist in one place

1. 01Define the saleAssets or shares, which entity, and what is in or out.
2. 02Gather the recordsThree years of statements and returns, plus current management accounts.
3. 03Normalise the profitOwner wages, private costs, related-party rent and one-off items, with evidence.
4. 04Document the businessCustomers, contracts, lease, staff, licences and systems.
5. 05Ask the tax questionsStructure, the concessions and the 1 July 2027 changes, with your adviser.
6. 06Choose the valuationIndependent, full scope, clear purpose and date.
7. 07Set the timingValue before you list.