To value your business before selling, start with two or three years of financial statements, adjust profit for owner wages and genuine one-off items, then apply a method that suits the business. An independent valuation gives you a reasoned figure before you set an asking price. It does not set the sale price: buyers and negotiation do.
Why value your business before you list it?
A valuation before listing tells you what the business is likely worth, and why, before anyone else puts a number on it. That helps you set a realistic asking price and decide whether now is the right time to sell.
Without your own figure, the first number you hear may be a broker's listing suggestion or a buyer's offer. Both are useful, but neither is independent of the sale.
A valuation also shows which parts of the business help or hurt value. You may find issues you can fix before going to market.
What is the difference between value, asking price and sale price?
They are three different numbers that answer three different questions. They can differ without any of them being wrong.
| Number | What it is | Who sets it |
|---|---|---|
| Valuation | An opinion of value at a set date, with the method and assumptions explained | A valuer |
| Asking price | The price you list the business at | You, often with a broker |
| Sale price | The price actually agreed, on particular terms | You and the buyer |
A sale price also depends on the terms. Payment over time, stock, debt and what assets are included can all change what a headline price really means. Read more in business valuation vs sale price.
What do buyers look at?
Buyers mostly look at how much reliable profit the business makes and how likely that profit is to continue after you leave. The Australian Government's guide to valuing your business makes the same point: for a buyer, future profit is usually the biggest part of the value.
Common things a buyer will check:
- Profit over several years, and whether it is steady, rising or falling.
- How much of the business depends on you personally.
- Customer spread: whether a few customers make up most of the sales.
- Staff, leases and supplier agreements, and whether they will continue.
- The condition of equipment, stock and other assets.
- How clean and complete the financial records are.
A buyer will usually do their own checks, called due diligence, and may get their own valuation. Your figure needs to survive that review.
How do I prepare my business for a valuation?
Get your records in order, reduce how much the business depends on you, and gather evidence for every adjustment you want to make. Good preparation makes the valuation more reliable and the sale smoother.
Records
Have your profit and loss statements and balance sheets for the last two or three years, the latest tax return, and year-to-date figures if the year is well advanced. Make sure the numbers in your accounts agree with your tax returns. See the full list of documents needed.
Owner dependence
Owner dependence means the business relies on you for sales, key relationships or day-to-day decisions. If customers would leave when you do, a buyer sees risk. Writing down processes and handing key tasks to staff can help over time.
Add-backs and the evidence behind them
Add-backs are costs added back to profit because they will not continue under a new owner, such as a genuine one-off legal bill or private expenses run through the business. Each one needs a reason and a record, such as an invoice.
Be careful with your own wages. If you work in the business, a buyer will need to pay someone to do that work. Adding back all of your pay without allowing for a replacement can overstate profit. Learn more in SDE vs EBITDA.
Which Valuo report fits a sale?
Choose by who will read the report. If it is only for you, the Business Value Report fits. If a buyer, broker, investor or lender will rely on it, choose the Professional Valuation Report. Sharing it with your own accountant or adviser is fine on either report.
| Business Value Report | Professional Valuation Report | |
|---|---|---|
| Suits | Your own planning and early sale preparation | When a buyer, broker or other party will read it |
| Signed | No, but reviewed by a valuer before it is issued | Yes, by the valuer responsible |
| Depth | A streamlined assessment | Deeper analysis, earnings adjustments explained, market evidence where available |
| Fee, revenue under $1 million | $995 + GST | $1,495 + GST |
| Fee, revenue $1 million to under $2 million | $1,495 + GST | $1,995 + GST |
| Fee, revenue $2 million to under $5 million | $2,495 + GST | $2,995 + GST |
| Fee, revenue $5 million to under $10 million | $3,495 + GST | $3,995 + GST |
For revenue of $10 million or more, you receive a fixed fee quoted before any work starts. Your fee is set by revenue and report type and never depends on the value concluded.
If you start with the Business Value Report and later need a report a buyer can read, you can usually upgrade. The upgrade fee is set after a scope review, with credit for the work already done.
What should I do next?
Start with your revenue band and the purpose of the sale. You will see your fixed fee straight away, then answer a few short questions to confirm the right report.
- Get your fixed fee
- See all pricing and how it works
If the sale is to a business partner or involves a restructure, related-party transfer or tax planning, talk to Oliver Group, the Valuo company that handles those. Selling a healthcare practice? Medival specialises in them. For tax on the sale, speak to your accountant.
Questions
Should I get a valuation before I talk to a business broker?
It helps. A broker's appraisal is usually aimed at setting a listing price. An independent valuation gives you your own reference point first, so you can test the broker's figure and ask better questions.
Is my asking price the same as my business's value?
No. A valuation is an opinion of value at a set date. An asking price is what you choose to list at. The sale price is what a buyer actually agrees to pay, on particular terms.
Which Valuo report should I get before selling?
The Business Value Report suits your own planning and early sale preparation. If a buyer, broker or other adviser will read and rely on the report, choose the Professional Valuation Report, which is signed by the valuer responsible.
Can I add back my personal expenses to increase profit?
Only expenses that genuinely do not relate to running the business, and only with records to prove them. Buyers test every add-back, and an add-back with no evidence is likely to be rejected.
Does a valuation set my sale price?
No. The final price depends on buyers, timing, due diligence and the terms of the deal. A valuation gives you a reasoned starting point, not a promise of what someone will pay.
General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.