How to Sell Your Business in Australia | IBV™ Guide

Most Australian owners sell a business once. Buyers, brokers and their advisers do it repeatedly. That imbalance is why preparation matters: the side with better evidence usually controls the conversation about price.

The Australian Government's guide to selling a business sets out the broad process—preparing the business, determining its value, finding a buyer, negotiating and completing the sale. This handbook concentrates on the part owners most often leave too late: understanding what the business is worth, and being able to defend that figure before a buyer tests it.

An independent valuation before you go to market does three things. It sets a realistic range for your own planning. It identifies the weaknesses a buyer will find—owner dependence, customer concentration, unrecorded adjustments—while you can still address them or at least explain them. And it gives you a reasoned position to negotiate from, rather than a number you hope for.

All numerical examples in this guide are fictional teaching illustrations. They are not IBV client results, industry benchmarks or a valuation of your business.

Price is a conclusion, not a starting point. Owners who begin with a number and search for support usually concede ground. Owners who begin with evidence can explain their number and hold it.

A serious buyer does not pay for your effort, your history or your plans. They pay for the future economic benefits they believe the business will deliver to them, adjusted for the risks of achieving them. Their advisers test that belief systematically.

Sustainable earnings. Buyers reconstruct your profit and loss. They replace owner remuneration with a commercial cost, remove one-off items in both directions and question anything that flatters the result. The EBITDA preparation guide works through that discipline from the seller's side.

Transferability. Will the customers, staff, suppliers and systems stay after you leave? A business whose revenue depends on the owner's personal relationships is worth less to a buyer than the same earnings held by contracts and a capable team.

Concentration. One customer at 40% of revenue, one key employee, one supplier or one premises lease with a short remaining term each represent a single point of failure. Concentration does not make a business unsellable, but it will be priced.

Verification. Expect due diligence against source records: bank statements, tax returns, BAS lodgements, payroll, contracts and the lease. Figures that cannot be supported by reliable evidence may be challenged, discounted or excluded.

The ATO's market valuation guidance reflects the same discipline from the tax side: reliable information, an explained method and evidence available at the relevant date. A buyer's diligence and a regulator's review reward the same thing—documentation.

Where practical, begin preparation 12–24 months before going to market, particularly where improvements need time to demonstrate results.

• Clean up the accounts. Separate personal and business expenses. Resolve related-party arrangements—rent, wages, loans—onto documented commercial terms. A buyer will normalise them anyway; doing it first lets you present the adjustment rather than defend it.
• Document owner involvement. Record what you actually do, how many hours it takes and what it would cost to employ someone to do it. Undocumented owner labour becomes an unpriced risk in the buyer's model.
• Secure the transferable assets. Renew the lease or negotiate options, formalise key customer and supplier arrangements where commercially sensible, and document systems that currently live in your head.
• Reduce concentration where you can. Diversifying a customer base takes time, which is exactly why it belongs in the preparation phase.
• Assemble the records. Three to five years of financial statements and tax returns, current management accounts, payroll summaries, asset registers, contracts and the lease. The business.gov.au valuation overview lists the same foundations.

Preparation is not cosmetic. Each item either removes a discount a buyer would otherwise apply, or converts an argument into a document.

Consider a fictional wholesale business, Brightline Hospitality Supplies, with normalised maintainable EBITDA of $280,000 after a commercial replacement salary for the owner's role and market rent for the premises. The owner expects $1,400,000, based on a “five times earnings” figure heard at an industry event.

An evidence review finds: two customers represent 45% of revenue; the owner manages both relationships personally; the lease has eighteen months remaining with no option; and equipment is aging with no recorded replacement plan. None of these make the business unsellable. All of them affect risk, and risk affects the multiple a buyer will support.

For this teaching example only, assume the evidence supports a 3.8× EBITDA multiple, indicating $1,064,000 enterprise value. The multiple is invented to demonstrate the arithmetic; it is not a suggested benchmark for any industry.

In this fictional example, the owner’s expectation exceeds the assumed valuation indication by $336,000. The gap illustrates why an asking-price expectation should be tested against evidence; it is not a measured financial loss. Two responses are available: accept the evidence and plan around a realistic figure, or spend the preparation period removing the risks that suppress the multiple—diversifying customers, documenting the owner's role for handover and negotiating a lease extension. Both are rational. Listing at $1,400,000 and waiting is usually not: overpriced businesses sit, and a stale listing itself becomes a signal buyers price.

Enterprise value is not what lands in your account. The bridge from the operating indication to the equity interest, and then to completion proceeds, has several steps—and each is a negotiation point.

Assume Brightline operates through a company and the proposed transaction is a sale of all its ordinary shares. The enterprise value includes the operating assets and an agreed normal level of operating working capital, but excludes surplus cash and financing debt. The $60,000 surplus cash remains in the company at completion, and none of the adjustments below has already been reflected elsewhere. With $240,000 equipment finance debt, the equity indication before the working-capital adjustment is $884,000.

For this illustration, operating working capital means agreed operating current assets, such as inventory and trade receivables, less agreed operating current liabilities, such as trade creditors. It excludes the cash and financing debt adjusted separately.

Then working capital. Buyers typically require the business to be delivered with a normal level of working capital—enough stock, debtors and creditors to trade without an immediate cash injection. Assume the agreed normal level is $110,000 and the business is delivered with $90,000. Under the assumed agreed adjustment mechanism, the $20,000 shortfall produces an adjusted equity indication before tax, transaction costs and payment conditions of $864,000. This is not automatically the seller’s completion payment.

Sellers who have not modelled this bridge experience each adjustment as a concession extracted late in the deal. Sellers who have modelled it negotiate the definitions—what counts as surplus, what is normal working capital, which debts transfer—before the price is agreed, when their leverage is greatest.

Two offers with the same headline number can be worth very different amounts.

Earn-outs and contingent consideration pay part of the price only if future performance targets are met. Suppose Brightline's buyer offers $864,000 plus a $100,000 earn-out tied to year-one revenue. The earn-out is not $100,000 of value today: it depends on results the seller no longer fully controls, on definitions that can be argued, and on the buyer's solvency at payment time. Contingent amounts should be assessed for probability and risk, not added at face value.

Vendor finance defers payment and exposes the seller to the buyer’s ability to repay. Purchase-price retentions delay the release of part of the consideration, subject to agreed conditions. Restraint clauses may limit the seller’s future competitive activities. Asset sale versus share sale changes which liabilities transfer and how the proceeds are taxed.

Compare offers on certainty, timing and risk, not on the largest number in the email. A lower unconditional offer can be worth more than a higher conditional one after allowing for timing and risk.

Read the structure before the sum. Ask of every offer: how much is certain, when is it paid, what must happen first, and what am I still exposed to after completion?

The tax outcome of a sale can differ materially depending on structure, timing and eligibility for concessions. The ATO's capital gains tax market valuation guidance explains when market values matter for tax purposes, and small business CGT concessions may reduce, disregard or defer qualifying capital gains, subject to the applicable conditions. They do not automatically eliminate every tax consequence of selling a business; eligibility turns on detailed tests applied to your specific entities, assets and history.

Three practical consequences follow. First, obtain tax and legal advice before entering binding sale arrangements. Once contracts are signed, changing the transaction structure may be difficult, costly or ineffective for the intended tax outcome. For a disposal under CGT event A1, the event generally occurs when the disposal contract is entered into, rather than at settlement. Second, where a tax outcome depends on market value—restructures, related-party transfers, concession eligibility—the valuation supporting it needs to be evidence-based and documented, because it may be reviewed years later. Third, the required valuation date depends on the applicable tax provision and may coincide with the transaction date. It should not automatically be assumed to be the settlement date or the date the report is prepared.

Under IBV policy, valuations for ATO and tax purposes require at least a Limited Scope engagement. This guide is general education, not tax advice; the concession rules in particular require advice on your circumstances.

A sale process typically runs months from preparation to completion, and the business must keep performing throughout. A deterioration in trading may affect negotiations or trigger rights under the sale agreement, depending on the agreed terms.

Protect confidentiality in stages, beginning with de-identified summaries where practical. Before disclosing identifiable employee, customer or supplier information, put suitable confidentiality arrangements in place and check applicable privacy and contractual obligations. Limit disclosure to what is reasonably necessary for due diligence. The OAIC’s guidance on selling a business explains why businesses covered by the Privacy Act must consider their obligations during due diligence; a confidentiality agreement alone does not authorise disclosure of personal information. Tell staff when the plan requires it, not when the rumour does. Keep running the business as if no sale were coming—because until completion, none is.

Choose advisers for the role they play. A broker or adviser markets the business and manages buyers. Your accountant manages tax and structure. Your lawyer manages the contract. A valuer establishes and documents what the business is worth. The roles complement each other; none substitutes for another.

An independent valuation is not a listing price and does not guarantee a sale outcome. Its value in a sale process is structural.

• It anchors negotiation in evidence. A documented, method-explained figure is harder to talk down than an owner's expectation, and easier to defend to a buyer's adviser.
• It tests the broker's range. If an agent's suggested price differs materially from the evidence, you can ask why before you are committed.
• It separates planning from selling. Knowing a supportable figure lets you decide whether to sell now, prepare longer or not sell at all—before paying for a campaign.
• It supports related decisions. Where the sale involves restructures, related-party transfers or tax values, the same evidence base serves those requirements.

The IBV™ Independence Guarantee matters here: no commissions, no fee linked to the concluded value and no interest in buying or selling your business. The figure is not shaped by anyone's incentive to list, to sell quickly or to please a party to the deal.

APES 225, revised October 2024, distinguishes calculation, limited-scope valuation and valuation engagements. IBV voluntarily aligns its valuation process and reporting with the relevant principles of APES 225; this does not imply professional accounting-body membership or APESB accreditation.

For an owner's own sale planning—testing whether to sell and at roughly what level—a Calculated Value (fixed $2,450 + GST) applies one agreed method to around three years of records, with no reliance by any other party. Where a buyer, lender, accountant or lawyer will rely on the figure, or the sale involves tax, restructure or shareholder dimensions, a Limited Scope Conclusion of Value (fixed $4,950 + GST) is the minimum under IBV policy, and the most common engagement. Complex or high-value businesses may suit a Full Scope Conclusion of Value (quoted).

Limited Scope is a defined engagement type, not a grade of quality. Restrictions on procedures or evidence may affect the conclusion and its suitability, and a more extensive valuation engagement may produce a different result. Many standard Calculated Value and Limited Scope engagements can be completed within approximately 5–7 business days once the engagement is signed, payment is received and the required information and material clarifications are complete. The fee is payable on signing; timing is confirmed for the agreed scope, and Full Conclusion timing is agreed individually. The Fixed Professional Fee comparison sets out the current offerings.

• What is the evidence-supported value of my business today, and what is suppressing it?
• Which of those factors can I realistically change in the next twelve months?
• What will a buyer's diligence find in my accounts, contracts and lease?
• What is the bridge from enterprise value to what I would actually receive, after debt, working capital, costs and tax?
• How do the offers I might receive differ on certainty and structure, not just price?
• Who will rely on the valuation, and which engagement does that require?

For how the resulting document should be read and tested, continue to the business valuation report guide. For how methods are chosen, see the methods guide.

This guide is general education, not a valuation, appraisal or advice about your particular sale. The examples deliberately simplify tax, financing and legal matters. An actual engagement requires business-specific evidence, defined instructions and separate legal or tax advice where relevant.

Frequently asked questions