The short answer, expanded
Market evidence is only as useful as what it actually records. A completed sale between unrelated parties records a price that a buyer paid and a seller accepted, on terms that can be examined. An advertised asking price records a seller's proposal. A valuation conclusion records one person's opinion on stated assumptions. These are different kinds of information, and they should not be added together as if they were the same thing.
The closer evidence is to a real arm's length agreement, the more weight it carries
What does the evidence actually record?
Completed arm's length transactions in similar businesses
Highest, once terms and earnings are aligned
Listed company data and public deal data
Useful as a cross-check, with adjustment
Broker asking prices and listings
Context only
Valuation conclusions
Context only; read the reasoning, not the number
Rules of thumb
Not evidence; at most a sense check
The ATO describes market value as the amount a willing buyer and seller would agree in an arm's length transaction, and it expects a valuation to be objective and supported with evidence. That framing explains the order of weight: the closer a piece of evidence is to a real, arm's length agreement on known terms, the more it can support a conclusion.
An evidence hierarchy
The table below sets out how Valuo approaches the main sources of market evidence for a private business. It describes a general order of reliability, not a fixed rule. A well documented broker sale can be better evidence than a poorly documented listed company comparison, and the weight always depends on the facts.
| Evidence type | What it records | Main limitations | Usual weight |
|---|---|---|---|
| Completed arm's length transactions in similar businesses | A price actually agreed between unrelated parties, at a known date | Terms are often private; earnings may be defined differently; few truly similar sales | Highest, once terms and earnings are aligned |
| Listed company data and public deal data | Share prices and disclosed takeover or acquisition terms | Usually much larger, diversified businesses; a share price reflects a small parcel, not control | Useful as a cross-check, with adjustment |
| Broker asking prices and listings | What a seller or broker proposed to the market | Not a sale; may never complete; the final price and terms are unknown | Context only |
| Valuation conclusions | An opinion on a defined basis, purpose and date | Not a transaction; depends on that valuer's assumptions | Context only; read the reasoning, not the number |
| Rules of thumb | A shorthand used in some industries | No identifiable transactions behind it; ignores the specific business | Not evidence; at most a sense check |
Two points from this table come up often. First, listed company prices need care. ASIC's guidance on expert reports notes that a quoted share price may not reflect the value of a company if 100 per cent of the shares were available for sale. Second, recent genuine offers for the whole business can be relevant. RG 111 lists them among the methods an expert may consider, which is different from an asking price set by the seller.
Why multiples from different sources are not comparable
A multiple is a price divided by an earnings figure. If two sources define either side differently, their multiples cannot be compared directly, even when they describe the same industry. Before any multiple is used, these questions need an answer.
| Question | Why it changes the multiple |
|---|---|
| Which earnings measure: EBITDA, EBIT or seller's discretionary earnings (SDE)? | SDE is measured before the owner's salary and benefits, so the same price divided by a larger earnings figure gives a lower multiple. EBIT is after depreciation, so it is smaller than EBITDA. |
| Is the owner's labour costed at a market salary, or not at all? | Earnings before a market salary for a working owner overstate what a passive buyer would earn. See normalising a working owner's salary. |
| Does the price include stock, or is stock paid for separately? | Some business sales add stock at value on top of the quoted price. A price that excludes stock divided by the same earnings shows a lower multiple. |
| Was it an asset sale or a share sale? | A share sale transfers the company with its cash, debt, tax history and liabilities. An asset sale may transfer only selected assets. |
| How much of the price was deferred or contingent? | An earn-out or vendor finance amount payable later, and only if targets are met, is worth less today than the same amount paid at completion. |
| Are earnings historical, current or forecast? | A multiple of last year's profit and a multiple of next year's forecast are different numbers for the same price. |
| Was cash and debt included in the price? | An enterprise value and an equity value are not interchangeable. See how cash and debt affect a valuation. |
A hypothetical illustration shows the size of the problem. Suppose a business sells for $900,000 plus stock of $100,000. Its EBITDA after a market salary for the owner is $300,000, and its SDE (before that salary) is $400,000. The diagram shows the three multiples the same transaction gives.
One sale at $900,000 plus stock can be described as 2.25x, 3.0x or about 3.33x
- EBITDA including stock ($1,000,000 ÷ $300,000)3.33x
- EBITDA ($900,000 ÷ $300,000)3.0x
- SDE ($900,000 ÷ $400,000)2.25x
Sample size and date
A single comparable sale tells you about one buyer, one seller and one set of circumstances. A small set of sales may be dominated by an unusual transaction. A valuer should say how many transactions were considered, how similar they are, and why any were excluded.
Date matters for two reasons. Interest rates, lending conditions and industry conditions change, so an old sale may reflect a different market. And for many purposes the valuation is at a specific date, which affects whether later sales can be used at all. In its guidance on property valuations for the GST margin scheme, the ATO says comparable sales must withstand objective scrutiny, and that sales after the valuation date or from a different area need commentary explaining why they are reasonable to use. The same discipline is sensible for business evidence: explain why each piece of evidence is comparable, rather than simply listing it.
How this connects to the Business Value Monitor
Valuo is preparing research on private business values, to be published as the Valuo Business Value Monitor. It is in preparation and no figures have been published. The approach on this page is the framework that research is being built on: separating completed transactions from asking prices and opinions, stating earnings definitions, and reporting sample sizes and date ranges alongside any figure.
Limitations
This page describes general principles for weighing evidence. It does not set out a valuation method, and it does not suggest that any particular multiple applies to any industry. The weight given to each source depends on the business, the purpose of the valuation and the quality of the information available. Some purposes, such as tax, family law or a regulated transaction, have their own requirements, and the relevant adviser should confirm what applies.
Within the Valuo group, Oliver Group publishes related material: a dated table of EBITDA multiples by industry with its method, a comparison of a broker appraisal and a formal valuation, and a note on Kilgour's case, a Full Federal Court tax decision about the weight given to an arm's length sale price. Read any multiple table together with the questions above.
For how a valuation, an asking price and an agreed sale price relate to each other, see business valuation vs sale price. For the reasons a turnover figure on its own is weak evidence, see why turnover alone does not establish value.
Next steps
- When you are shown a multiple, ask which earnings measure it uses, whether stock and owner salary are included, and how many completed sales it is based on.
- Treat asking prices and other valuers' conclusions as background, and ask for the underlying transactions instead.
- Use the earnings normalisation worksheet to put your own earnings on the same basis as any evidence you are comparing against.
Questions
Can a broker's asking price be used as a comparable sale?
Not as a sale. An asking price shows what a seller hoped to achieve on the day it was advertised. It can indicate how a market is being pitched, but it is not evidence that a buyer paid that amount or on what terms.
If another valuer valued a similar business, can that figure be used as evidence?
A valuation conclusion is an opinion reached on that valuer's assumptions, purpose and date. It is not a transaction. The reasoning and underlying evidence in it may be worth reading, but the conclusion itself should not be counted as a sale.
Will the Valuo Business Value Monitor publish multiples?
The research is in preparation and no figures have been published. The intention is that its method note will state which evidence types it includes, how earnings were defined and the date range covered.
Sources
- Market valuation of assets, Australian Taxation Office. Market value as the price a willing buyer and seller would agree in an arm's length transaction; valuations must be objective and supported by evidence.
- Valuation issues (GST margin scheme), Australian Taxation Office. In property valuations, comparable sales must withstand objective scrutiny, and sales from another market segment or after the valuation date need explanation.
- RG 111 Content of expert reports, Australian Securities and Investments Commission. RG 111.82 to RG 111.86: use more than one method where possible, explain the weight on each, and note that a quoted share price may not reflect the value of 100% of a company.
- Guide to valuing SMSF assets, Australian Taxation Office. Lists the most recent sale of a share or unit between unrelated parties as supporting evidence for unlisted securities; where an agent appraisal or online report is the only evidence for real property, it should list the comparable sales relied on.
Cite or reuse this page
Valuo Insights team (2026). How much weight completed sales, asking prices and valuation opinions carry. Valuo. https://valuo.com.au/insights/completed-sales-asking-prices-and-valuation-opinions/ (updated 14 November 2026).
Quote short passages with attribution and a link to this page. Charts and tables created by Valuo may be republished unchanged with the credit "Source: Valuo (valuo.com.au)" and a link. Third-party sources keep their own terms. See the reuse terms.
General educational information, not financial, tax or legal advice. Worked examples are hypothetical and do not value a real business. A valuation depends on its purpose, the evidence and the agreed scope.