Key takeaways
Choose a small-business engagement by purpose and reliance, not size
A small turnover does not justify a planning-only engagement where another party will rely on the result. Calculated Value is for your own planning; tax, family law, ownership changes and restructures require at least Limited Scope. Confirm the actual decision and intended users before selecting a fee.
Price the owner’s replacement work before measuring small-business earnings
In many small businesses the owner is also the manager, key salesperson and main relationship holder. A valuation must replace that work with a commercial cost and assess what would transfer without the owner.
Support small-business earnings adjustments rather than adding back family costs automatically
Personal expenses, family wages and related-party rent need individual evidence and a commercial explanation. Some remain necessary costs under new ownership. Review ledgers, duties and replacement costs to show sustainable earnings instead of assuming every tax-account adjustment increases value.
Reconcile small-business records before relying on apparent profit
Financial statements, tax returns and bank records should tell a consistent story. Where gaps exist, the valuer should disclose how they were treated rather than ignore them.
Compare fixed fees alongside the permitted use of each report
IBV’s Fixed Professional Fee is $2,450 + GST for Calculated Value and $4,950 + GST for Limited Scope, with Full Conclusion quoted. The minimum fee does not make a planning-only engagement suitable for tax or third-party reliance. Confirm the scope, intended users and delivery conditions before signing.
Small business valuation services for a real decision
A small business valuation should answer the question you actually face: what is the operating business worth, what is a particular ownership interest worth, and who needs to rely on the result? An asking price, accounting equity and the amount an owner takes home after a sale are different measures. Agreeing the subject and purpose first prevents a detailed report from answering the wrong question.
IBV™ works with owner-operated and family businesses across Australia, including sole traders, partnerships, companies and businesses held through trusts. Your valuation is led by Dr Patrick Hillenbrand, AVI Certified Business Valuer. The engagement is chosen by purpose and intended reliance—not turnover—with a Fixed Professional Fee agreed in writing before work begins.
Discuss your small business valuation or compare valuations and fees. You do not need to choose an engagement before the conversation.
When a small business owner needs a valuation
Selling or buying. A valuation provides an independent reference for negotiations, not a guaranteed selling price. Define whether the transaction concerns operating assets or shares, and identify stock, cash, borrowing and obligations included in the proposed deal. Our selling valuation service explains the seller’s considerations; buyers should also arrange appropriate financial, legal and tax due diligence.
Partner changes and succession. A co-owner’s interest is not automatically their percentage of the whole-business headline. Ownership rights, agreements, funding and the particular transfer need review. For a family succession, distinguish the business value from the family’s preferred payment arrangement and tax consequences. Partner and co-owner buyout valuations address that specific instruction.
Tax and restructuring. Ask your accountant to identify the asset, relevant date and tax purpose. A business sale, a transfer of shares and a restructure can require different valuation instructions. Small business CGT concession valuations concern evidence for an adviser’s eligibility assessment; a small-business label alone does not establish concession eligibility.
Family law. IBV provides party-instructed business valuations for non-litigious separation negotiations, voluntary mediation and settlement planning. The purpose and authorised users are agreed in the Engagement Letter. The other spouse is not automatically permitted to rely on the report. IBV does not provide expert-witness or court-appointed valuations.
What makes an owner-operated business different
The owner’s work is not free
In a small business, the owner may manage the team, win work, serve customers and hold the technical qualification. Identify those duties and the cost of replacing them before deciding what earnings belong to the business. Remuneration already charged as an expense may be added back as part of a documented adjustment, but a supported replacement cost must then be allowed for. Drawings or distributions that never reduced accounting profit are not salary expenses to add back.
Customer relationships also need assessment. Work that depends on the departing owner personally may not continue on the same terms. Staff capability, documented processes, customer retention and a realistic handover can support transferability; none creates an automatic increase in value.
Accounts need explanation, not blanket add-backs
Tax returns and financial statements provide an important starting point, but they may not explain current trading or sustainable earnings by themselves. Family wages, related-party rent, personal costs and unusual expenses need individual review. A family member doing necessary work still needs a commercial wage. An irregular repair can remain a necessary operating cost. An expense should not disappear simply because the owner calls it discretionary.
Reconcile financial statements with management accounts and supporting records. Explain material differences and separate completed improvements from plans. Read our normalised earnings guide for the evidence behind these adjustments.
Continuity matters alongside profit
Review customer and supplier concentration, premises tenure, staffing and equipment requirements. A lease assignment, licence or customer contract may need consent or separate legal advice. Strong historical profit does not establish that a purchaser can keep trading on the same terms. Conversely, a concentrated customer base is not an automatic discount: its durability and economics need evidence.
Working capital and essential equipment spending also matter. Reported profit is not necessarily cash available for an owner. The valuation must recognise the resources supporting the earnings and explain which assets and liabilities sit within its boundary.
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.
How we assess small business value
For an established business with supportable ongoing earnings, capitalisation of maintainable earnings may be appropriate. The earnings measure and capitalisation rate must be compatible, including the enterprise or equity perspective, tax treatment and risks. There is no universal small-business multiple, and turnover alone does not establish value.
Other evidence may call for an asset-based analysis, discounted cash flow or relevant market comparisons. Method selection depends on the instruction and information, not a promise to run every possible calculation. IVS recognises market, income and cost approaches; asset-based analysis is not automatically the cost approach. Where a secondary method provides a useful cross-check, differences are investigated rather than mechanically averaged. Our business valuation methods guide explains these distinctions.
If operating enterprise value is assessed first, a reconciliation may be needed to reach equity value. Relevant cash, debt and other balances must be treated consistently without counting normal working capital or operating assets twice. Separately held property, shareholder loans and personal assets should not be silently included.
Choose the engagement by purpose and reliance
IBV voluntarily aligns its processes and reporting with relevant APES 225 principles. This is distinct from the standard’s mandatory obligations for relevant accounting-body members and is not a claim of universal compliance. Scope and intended users—not the size of your turnover—determine the appropriate engagement.
Limited Scope describes a defined restriction on the approaches, methods or procedures the valuer may apply, not a grade of quality. It produces a Conclusion of Value, while a Calculation Engagement produces a Calculated Value. A fuller engagement may produce a different result. Neither a package name nor a fixed fee guarantees acceptance by a buyer, lender or authority.
Calculated Value — Fixed Professional Fee $2,450 + GST. IBV’s minimum engagement fee. One agreed method, capitalisation of maintainable earnings, with review of around three years of records and consultation on the initial value. For your own preliminary planning only, with no third-party reliance. Tax, ATO, family law, shareholder or partner changes, restructures and related-party transfers require at least Limited Scope under IBV policy.
Limited Scope Conclusion of Value — Fixed Professional Fee $4,950 + GST. IBV’s most common engagement, for appropriate transactions and adviser-led purposes where the agreed scope and evidence support a conclusion. Includes a draft report and discussion through IBV’s Valuation Completion Memorandum before finalisation. Intended users and restrictions are confirmed individually.
Full Conclusion of Value — quoted on instructions. Indicated fee range $6,950–$14,950 + GST. Suitable where the instruction and management information support unrestricted method selection, including discounted cash flow where appropriate. Scope, fee and timing are agreed first.
Prepare the records that explain your business
Start with the available records rather than delaying contact until everything is perfect:
The checklist is tailored to the engagement. Tell us about gaps, inconsistent records and deadlines early. Missing evidence may require clarification, an explicit limitation, a revised scope or a decision that the requested work cannot yet proceed. Organised records are helpful, but the valuation is not an audit by implication.
financial statements and tax returns, usually three to five years where available;
current management accounts and explanations of changes in sales, margins and costs;
ownership structure, share or partnership agreements and related-party arrangements;
owner and family remuneration, duties and proposed earnings adjustments with supporting records;
customer and supplier information, key contracts, licences and the premises lease;
equipment, inventory, borrowing and working-capital details;
budgets and forecasts where relevant, with the assumptions and people behind them identified.
Your report and the review conversation
The signed report identifies the subject, purpose, valuation date, basis, agreed scope and intended users. It explains the information relied on, normalising adjustments, selected methods, important assumptions, limitations and result. For an agreed Limited Scope engagement, the draft and discussion let you clarify factual information before finalisation; they are not an invitation to choose the conclusion.
The online Risk and Value Driver Assessment and ANZSIC Industry Comparable Valuations Report are included with all three advertised engagements. Your Industry Top Performers Report and SWOT Analysis Report are included with Limited Scope and Full Conclusion, not Calculated Value. See what a Business Valuation Report contains and the full fee comparison for engagement-specific inclusions.
Independence, delivery and your next step
The IBV™ Independence Guarantee means no commissions, no hourly billing, no fee linked to the value concluded and no interest in buying or selling your business. Independence also requires engagement-specific conflict assessment: a fixed fee alone does not establish independence or quality. Your accountant and lawyer retain responsibility for tax, legal and transaction advice.
Payment is due on signing the engagement letter. Calculated Value and Limited Scope delivery is generally 5–7 business days after all required information, clarifications, signed engagement documents and payment are received. Complex work may take longer; Full Conclusion timing is agreed individually. Confirm the timetable in writing before relying on a deadline.
IBV serves capital-city and regional businesses through document review and scheduled discussions. Any required site visit or specialist asset assessment is scoped separately. Start with what you own, why you need it valued, who will use the report and your deadline. Book a Free Valuation Call to discuss the appropriate scope and a written Fixed Professional Fee.
Sources and further reading
Frequently asked questions
How much does a small business valuation cost?
IBV’s minimum engagement is a Calculated Value with a Fixed Professional Fee of $2,450 + GST, for your own preliminary planning only. Limited Scope Conclusion of Value is $4,950 + GST. Full Conclusion of Value is quoted on instructions, with an indicated range of $6,950–$14,950 + GST. Choose by purpose and permitted reliance, not turnover; payment is due on signing.
Is a small business valuation based on turnover or profit?
Turnover alone does not establish value. For an established profitable business, maintainable earnings capitalisation may be appropriate after supported adjustments and owner replacement costs. Other instructions and evidence may call for asset-based analysis, discounted cash flow or market comparisons. The rate must match the earnings measure, and no universal multiple applies.
Do I need a valuation before selling my small business?
An independent valuation can inform price expectations and negotiations, but it does not guarantee a sale or determine the final negotiated price. Ask your advisers about any contractual or statutory requirements. Identify whether assets or shares are being sold, who needs to rely on the report and the terms of the proposed transaction before choosing scope.
Can my salary and family wages be added back?
Not automatically. Remuneration already expensed may be adjusted, but necessary owner and family work needs a supported commercial replacement cost. Drawings and distributions that did not reduce accounting profit are not expenses to add back. Provide duties, payroll records and evidence for the proposed adjustments.
Can you value a business with incomplete or tax-prepared accounts?
Discuss the records available and explain inconsistencies early. Tax-prepared accounts are a starting point, not proof of maintainable earnings. We may need clarification or supporting records; material gaps can require limitations, revised scope or a decision not to proceed with the requested work. Missing information is not simply replaced with favourable assumptions.
What documents should I prepare?
Provide available financial statements and tax returns, current management accounts, ownership documents, owner and family remuneration, relevant contracts, the lease, equipment and debt schedules. Usually three to five years of records are useful where available; the actual checklist depends on the engagement. Include forecasts where relevant and explain material changes.
Which engagement suits tax, a partner buyout or family law?
Under IBV policy, tax, ATO, family law, shareholder or partner changes, restructures and related-party transfers require at least Limited Scope—even if you initially describe the work as personal planning. The agreed purpose, evidence and intended users determine suitability. Family law work is for non-litigious negotiations, voluntary mediation and settlement planning, not expert-witness or court-appointed work.
Can you value a sole trader, partnership or family company?
Yes, subject to an acceptable instruction and available evidence. Identify whether the subject is operating assets, a partnership interest, company shares or an interest in a trust. Ownership rights and agreements can mean an interest is not simply a percentage of the whole-business value. Separately owned property and shareholder loans require explicit treatment.
How long does a small business valuation take?
Calculated Value and Limited Scope are generally delivered within 5–7 business days after all required information, clarifications, signed engagement documents and payment are received. Complex work may take longer. Full Conclusion timing is agreed individually. Confirm your deadline and timetable in writing before work begins.
Can a buyer, lender or accountant rely on my report?
Only where the engagement expressly permits that user and purpose. A Calculated Value is for your own preliminary planning, not third-party reliance. Identify intended recipients and any requirements before commissioning the work. Neither a signed report nor the AVI credential guarantees that a recipient will accept the conclusion.
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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