Key takeaways
Value share-class payment rights before applying an ownership percentage
Different share classes can receive money in a set order, sometimes called a distribution waterfall, so owning ten per cent does not necessarily mean receiving ten per cent of the proceeds. Ask your legal adviser to confirm the rights before the valuer models payments at different business values.
Trace distributable business cash to the shares or trust units held
Business profit is not necessarily money available to you because debt, reinvestment needs and restrictions can limit distributions through companies or trusts. Ask for a schedule tracing cash to your shares or units, with investor loans shown separately so the same amount is not counted twice.
Compare recent share sales against the rights of your own holding
A recent share sale may include special rights, deferred payment or benefits such as employment that your holding does not provide. Supply the transaction documents so the valuer can assess whether the price is relevant evidence rather than automatically treating it as the value of your interest.
Model dilution before treating today’s ownership percentage as permanent
Options or securities that can turn into shares may reduce your ownership percentage when exercised or converted, a change known as dilution. Ask the valuer to explain the supported assumptions and realistic routes to receiving value, rather than assuming you can immediately sell your share of company assets.
Separate holding-specific risks from risks already in business earnings
Changes in distributions, ownership rights or sale restrictions can affect your holding differently from the business as a whole. Request a comparison showing the important assumptions separately and explaining whether a risk already reflected in expected cash payments needs any further adjustment, to avoid counting its effect twice.
Specify the security being valued
A business value and the value of a parcel of shares or units are not interchangeable. Identify the entity, class, holding size and purpose before analysis begins. Different interests may carry different economic or governance rights, so a simple ownership percentage may not describe what a hypothetical purchaser would receive or be able to influence.
Read the ownership documents
Provide constitutions, trust deeds, shareholder agreements, unit registers and details of recent capital changes. Distribution rights, redemption terms, transfer restrictions and approval requirements can all matter. Financial statements alone may not reveal these features, particularly where multiple classes exist or agreements alter how proceeds are allocated on a sale, exit or winding up.
Bridge enterprise value to the interest
The analysis may begin with the underlying business and then reconcile debt, cash and other assets to equity value. Allocating that equity to the instructed holding requires attention to the rights attached to it. Control or marketability adjustments need evidence and explanation; they should not be applied mechanically simply because an interest is privately held.
Signed
A clear valuation conclusion starts with an agreed purpose, relevant evidence and disclosed assumptions. The report identifies the interest valued and explains the reasoning behind its conclusion.
Show the allocation clearly
A useful report sets out the valuation of the underlying operations, the equity bridge and the reasoning used for the specific parcel. It identifies relied-on documents and any unresolved questions about rights. This helps advisers distinguish changes in business performance from changes caused by capital structure, funding arrangements or the characteristics of the interest itself.
Match the conclusion to its purpose
A negotiated exit formula, a tax market value and a dispute instruction may ask different questions about the same holding. Agree the basis with the relevant adviser before commissioning work. For contested ownership matters, shareholder dispute valuation allows the assumptions and permitted uses to be addressed explicitly in the engagement.
Test the distribution waterfall before allocating equity
Prepare a worked distribution schedule at several possible equity values. Preference shares, unpaid capital, participating rights and redemption priorities can cause the amount attributable to ordinary shares to change disproportionately. A parcel representing ten per cent of issued securities need not receive ten per cent of every distribution. Obtain the documents effective at the valuation date, including amendments and side agreements, rather than relying on a current register alone.
Ask the legal adviser to resolve ambiguous entitlements before the schedule becomes a valuation input. The valuer can then model the confirmed rights and expose where a preference absorbs most available equity. This is particularly important when a recent investment round introduced a security with protections that older investors do not hold.
Follow cash through interposed entities
For a unit trust owning shares in a trading company, trace the route from operating cash flow to the unit holder. Record operating debt, holding entity liabilities, distribution obligations and cash retained for reinvestment. A profitable subsidiary may not be able to distribute everything its accounts show as profit. Borrowing covenants and necessary capital expenditure can constrain the cash available to owners.
Maintain a separate schedule for amounts owed to or by investors. A unit holder loan may be a distinct asset rather than part of the units themselves. Identify where the same cash, receivable or liability appears in consolidated and standalone records. Reconciliation should remove duplication without erasing an economically separate claim held by the investor.
Use actual transactions as evidence, not automatic answers
Request subscription documents, transfer agreements and settlement statements for recent dealings in the securities. Record whether the parties were related, whether payment was deferred, and whether the buyer also obtained employment, board representation or commercial contracts. A headline price can combine investment value with benefits unavailable to the parcel being assessed.
A small employee transfer may provide limited evidence about an external purchaser's price. Conversely, a genuine independent capital raising can be informative after adjusting for security rights and the interval between transaction and valuation dates. The ATO's market valuation guidance treats relevance and reliability as central considerations; it does not make every recorded transaction a conclusive market benchmark. 1
Examine dilution and the route to realisation
Review options, convertible instruments, partly paid securities and committed capital calls. Show whether the instructed holding is assessed on issued capital or another expressly defined basis. Model conversion only where the relevant terms and assumptions support it. An investor's percentage can shrink even when the underlying operating business becomes more valuable.
Then document plausible ways the owner could receive value: distributions, redemption, an approved transfer or a whole entity sale. Do not assume that a theoretical exit is immediately available. ASIC explains that voting rights depend on share class and that company assets belong to the company, not directly to its shareholders. Those distinctions help prevent a parcel valuation from becoming a notional allocation of assets the investor cannot individually sell. 2
Present a parcel sensitivity that advisers can use
A useful decision table varies only the material unresolved inputs, such as maintainable distributions, conversion outcomes or an evidenced realisation restriction. Show the effect on the parcel separately from the effect on total equity. This makes it possible to identify whether further financial investigation or clarification of ownership rights would most improve the assessment.
Avoid stacking overlapping adjustments for the same risk. If restricted distributions already reduce expected cash flows, explain why a further adjustment is or is not required. The final schedules should allow a reader to trace one dollar of operating value through entity liabilities, security priorities and the assessed holding without guessing what has been counted twice.
For a private company, our company valuation services explain how operating-business value, company equity and the particular ownership interest fit together.
Scope, fees and timing
See our fixed-fee valuation packages and confirm the scope and fee before commissioning work. Confirm the purpose, intended users, information requirements and inclusions in a written engagement before work begins. Calculated Value and Limited Scope delivery is 5–7 business days from complete financial information and a signed engagement. Full Conclusion timing is confirmed individually in the engagement letter. Specialist requirements or changes to the instruction may affect suitability and timing; confirm these before relying on an external deadline.
Sources and further reading
Frequently asked questions
Is my 25 per cent shareholding worth a quarter of the business?
Not necessarily. First we establish what is being measured: operating business value, total equity or your particular parcel. Debt, surplus assets and the rights attached to your shares can affect the result. Any parcel adjustment needs evidence and a purpose-specific basis, not an automatic percentage because the holding is smaller.
What documents do you need to value units in our private trust?
Provide the trust deed and amendments, unit register, accounts, loan balances and documents governing distributions, redemptions and transfers. These help identify the rights actually being valued. If the meaning of a deed provision is uncertain, your solicitor should clarify it rather than have the valuation assume rights that may not exist.
Our company has ordinary and preference shares. Can you give one price per share?
A single price may be inappropriate where classes have different dividend, capital or voting rights. We need the constitution, capital structure and any shareholder agreement before allocating equity value. The report should explain the allocation between classes and the assumptions used, particularly where preferences affect who receives proceeds first.
Do you automatically discount privately held shares because they are hard to sell?
No automatic discount applies simply because shares are unlisted. We examine the valuation purpose, transfer restrictions, distribution rights, market evidence and characteristics of the parcel. Any adjustment must be supported and explained. A contractual buyout or court instruction may also require a different treatment from an ordinary market value assessment.
Does the shareholder loan I am owed form part of my share value?
A shareholder loan and a shareholding are different interests and should be identified separately. We examine how the loan is recorded, its terms and the entity’s financial position when reconciling business value to equity. Your adviser should confirm whether the transaction transfers, repays or retains the loan to avoid counting it twice.
Can the last share issue price be used for my current parcel?
A recent issue can be relevant evidence, but we need its date, terms, investor rights and commercial context. The company’s performance and capital structure may have changed, and your parcel may carry different rights. We assess whether that transaction is comparable rather than apply its headline price without adjustment or explanation.
Can you value shares in a company that has not started making profits?
We can assess the proposed scope once we understand its assets, funding, operations and available evidence. A loss-making company is not necessarily worthless, but forecasts require careful support. Provide development milestones, cash requirements and investor documents so the chosen approach reflects the business’s stage rather than a mature-company earnings assumption.
Can one valuation cover our holding company and its subsidiaries?
It may, if the group interests and intended outputs are clearly specified. We need the ownership chart, entity accounts and intercompany balances to understand where value sits. The analysis should reconcile underlying businesses and liabilities without double counting. Separate parcel values or multiple valuation dates can require additional agreed work.
Will the share value automatically become my tax cost base?
No. A valuation establishes evidence of value for a specified purpose and date; it does not determine the tax consequences of acquiring or transferring the shares. Your accountant must identify the relevant provisions, consideration and any rollover treatment. Tell us the tax question before engagement so the report addresses the required interest.
What will the report explain beyond a final share price?
The agreed report should identify the entity, security class, parcel, valuation date and purpose, then explain methods, evidence and significant assumptions. It should show how business value connects to equity and the instructed interest. This makes differences caused by debt or ownership rights visible rather than leaving an unexplained headline number.
A clear, independent view of value — with the evidence behind it.
- Understand the conclusion — and what drives value.
- Gain an independent perspective. Move forward with confidence.
- Benchmark your business against industry performance.
- Identify strengths, risks and opportunities through SWOT analysis.
WHAT YOU GET IN A LIMITED SCOPE VALUATION REPORT
Inside your IBV™ report
Executive Summary
Conclusion of value · Method selected · Valuer qualifications
Detailed Report
Maintainable earnings · Cap rate / multiple · Premise of value
The Evidence Pack
SWOT analysis · Top Performers Report · RAVDA score
APES 225 voluntarily aligned. Report depth and supporting analysis follow your agreed package and engagement scope.
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