Quick Summary
Whether you’re planning to sell, bring in a partner, settle a dispute, or plan your estate — you need to know what your business is actually worth. This guide explains the main business valuation methods used in Australia, what industry multiples look like in 2026, when a formal valuation is required, and what it costs to get one done properly.
What Is a Business Valuation?
A business valuation is a formal assessment of the economic value of a business or an ownership interest in a business. It’s not guesswork — a professionally prepared valuation uses recognised methodologies, comparable transactions, and industry-specific multiples to arrive at a defensible, documented value.
In Australia, business valuations are used for a wide range of purposes: business sales, SMSF-related acquisitions, partnership disputes, shareholder buy-outs, family law proceedings, estate planning, and capital raising. If you’re considering a formal business or shares valuation, Verus AA’s Chartered Accountants can guide you through the entire process.
The Three Main Business Valuation Methods in Australia
1. Earnings Multiplier (EBIT / EBITDA Multiple)
This is the most commonly used method for small to medium businesses in Australia. The valuer determines a normalised earnings figure (typically EBIT or EBITDA) and applies an industry-appropriate multiple. The multiple reflects risk, growth potential, customer concentration, and market conditions.
Example: A professional services business generating $300,000 EBIT per year, with a market multiple of 3.5x, would have an indicative value of $1,050,000.
2. Asset-Based Valuation
This method values the business by summing the net value of its assets (both tangible and intangible) minus liabilities. It’s most applicable to asset-heavy businesses (e.g. manufacturing, property holding companies) or businesses being wound up. It generally produces the lowest valuation for going-concern businesses because it doesn’t fully capture earnings capacity or goodwill.
3. Discounted Cash Flow (DCF)
The DCF method projects future free cash flows and discounts them back to present value using a weighted average cost of capital (WACC). It’s technically the most rigorous method and is common in larger transactions or businesses with strong, predictable revenue streams. It requires reliable financial forecasts, which makes it less suitable for early-stage or volatile businesses.
| Method | Best Suited For | Key Input | Common Use Case |
|---|---|---|---|
| Earnings Multiplier | Most SMEs | Normalised EBIT or EBITDA | Business sale, buy-out |
| Asset-Based | Asset-heavy or winding-up | Net asset value | Liquidation, holding companies |
| DCF | Larger or high-growth businesses | Future cash flow forecasts | Capital raising, acquisitions |
Business Valuation Multiples by Industry in Australia (2026)
Industry multiples are a reference point — not a fixed rule. The actual multiple applied in any valuation will be adjusted based on business-specific factors like customer concentration, key person risk, recurring revenue, and market conditions. Our business advisory team can help contextualise these figures for your specific situation.
| Industry | Typical EBIT Multiple | Key Value Drivers |
|---|---|---|
| Professional Services (accounting, legal) | 2.0x – 4.0x | Client retention, recurring fees, referral networks |
| Trade Services (plumbing, electrical) | 1.5x – 3.0x | Contracts, team size, repeat customer base |
| Healthcare / Medical | 3.0x – 6.0x | Patient list, location, billing model |
| Retail (bricks-and-mortar) | 1.0x – 2.5x | Location, lease terms, inventory |
| Technology / SaaS | 4.0x – 10.0x+ | ARR, churn rate, scalability |
| Hospitality (cafe, restaurant) | 1.0x – 2.0x | Location, lease, operator reputation |
| Manufacturing | 2.0x – 4.0x | Plant and equipment, contracts, IP |
A professionally prepared business valuation is a documented, defensible assessment — not a back-of-envelope estimate.
When Do You Need a Business Valuation?
- ✓
Selling your business: To set a realistic asking price and negotiate from a position of knowledge. See the Australian Government’s guide to selling your business for further context. - ✓
Buying a business: To verify the seller’s asking price is supported by the underlying financials. - ✓
Bringing in a business partner: To determine the equity split and entry price fairly. Our business advisory service can structure this correctly from day one. - ✓
Partner or shareholder dispute: An independent valuation provides an objective basis for settlement. - ✓
Family law proceedings: Business interests must be valued as part of asset disclosure. - ✓
Estate planning: To value business interests for succession planning or will preparation. Learn more about how we approach business structuring and succession. - ✓
SMSF acquisition: If your SMSF is buying a business interest from a related party, an independent valuation is required by the ATO.
How Much Does a Business Valuation Cost in Australia?
The cost of a formal business valuation in Australia depends on the complexity of the business, the purpose of the valuation, and who prepares it. Understanding your structure upfront — whether you operate as a sole trader, company, or trust — can also affect the complexity and therefore the cost. Read our guide on sole trader vs company vs trust in Australia to understand how structure impacts valuation.
| Valuation Type | Typical Cost Range (AUD) |
|---|---|
| Desktop / indicative valuation (informal) | $500 – $1,500 |
| Formal valuation report (small SME) | $3,000 – $8,000 |
| Formal valuation (complex / multi-entity) | $8,000 – $20,000+ |
| Expert witness report (litigation) | $15,000 – $40,000+ |
Why Verus AA?
Business Valuations by Chartered Accountants with Real-World Experience
At Verus AA, our Chartered Accountants prepare business valuations for sales, acquisitions, family law, SMSF purposes, and partnership disputes. We use recognised Australian methodologies and produce valuation reports that stand up to scrutiny — from negotiation rooms to courtrooms.
We’ve valued businesses across professional services, trade, healthcare, retail, and technology. Our fees are transparent and our reports are clear, rigorous, and purpose-built for your specific situation.
Business Valuation Specialists
SMSF Valuation Compliant
Family Law Valuations
Sydney Based
Related Reading
Also from the Verus AA Insights Blog
Frequently Asked Questions
Find Out What Your Business Is Worth
Get a professionally prepared business valuation from Verus AA Chartered Accountants. Clear methodology, transparent fees, and a report that stands up to scrutiny.
973 Pacific Hwy, Pymble NSW 2073 | Mon–Fri 9am–5pm
