How Much Does a Business Valuation Cost in Australia

• Early planning or internal benchmarking.
• Preparation for a business sale, acquisition or succession.
• Tax, CGT, restructuring or a related-party transaction.
• Family law, shareholder dispute, estate or commercial litigation.
• Finance, audit, governance or another form of third-party reliance.
• Valuation of IP, software, minority interests or another specialised asset.

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Providers use different commercial labels, so the engagement letter is more important than the service name. Where APES 225 applies to a member providing a valuation service, it distinguishes valuation engagements, limited scope valuation engagements and calculation engagements.

The appropriate level depends on what the client needs the valuation to do. A narrower engagement can be entirely appropriate when its limitations are understood. Problems arise when a narrow report is later used as if it were prepared for external reliance or a contested purpose.

1. Purpose and scrutiny. A report intended for a court, the ATO, a lender or a disputed transaction usually requires more evidence, documentation and review than an internal planning exercise.
2. Number of entities and interests. A single operating company is generally simpler than a group containing trusts, holding entities, related-party loans, multiple share classes or intercompany charges.
3. Quality of financial records. Clean monthly accounts, reconciled tax returns and a complete general ledger reduce time. Inconsistent records require additional reconstruction and clarification.
4. Valuation date and history. A current valuation is usually easier to evidence than a retrospective valuation requiring reconstruction of conditions and information available several years earlier.
5. Earnings normalisation. Owner remuneration, related-party arrangements, family wages, unusual revenue and repeated one-off costs can require detailed testing and source-document review.
6. Forecasting and business model complexity. Multi-site, project-based, subscription, seasonal or rapidly changing businesses may require more detailed modelling and sensitivity analysis.
7. Specialised assets or rights. Property, plant, IP, software, licences, minority interests and unusual contractual rights may need separate methodologies or external specialist input.
8. Process and urgency. Expert conferences, questions from advisers, joint instructions, court timetables and accelerated deadlines add review and project-management requirements.

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• The valuation purpose, date, asset or interest and intended users.
• The type of engagement and any scope restrictions.
• The information the client must provide.
• The valuation approaches expected to be considered.
• The deliverable: oral advice, calculation, estimate, report or expert determination.
• Whether meetings, management interviews, sensitivities and adviser queries are included.
• Any third-party specialist costs, travel, urgency fees or expert-witness work excluded from the fee.
• The expected timetable, review process and payment terms.

1. Does the scope match the purpose? A cheaper report is not comparable if it cannot be relied on for the intended transaction or proceeding.
2. Who will perform and review the work? Confirm the lead practitioner’s valuation experience and who will sign or take responsibility for the conclusion.
3. How will independence be handled? Ask about conflicts, related services and whether the report is intended to be independent.
4. How will assumptions be tested? The provider should explain how financial inputs, forecasts, normalisations and market evidence will be verified.
5. What methods will be considered? Method selection should follow the purpose, business and available evidence rather than a fixed template.
6. What happens after the report is delivered? Clarify whether a presentation, adviser discussion, questions, conference or update is included.

Business size is only one cost driver. A $3 million business with three years of clean accounts and a straightforward ownership structure may be easier to value than a $1 million business with incomplete records, disputed ownership, related-party transactions and a historical valuation date.

For that reason, a precise quote usually requires a short scoping conversation and a preliminary review of the available information. Publishing a broad fee range without understanding purpose and complexity can create the wrong expectation for both client and adviser.

• Provide three to five years of financial statements and tax returns.
• Provide current management accounts, balance sheet and general ledger.
• Prepare a group structure chart and identify the interest to be valued.
• State the purpose, intended users and valuation date clearly.
• List proposed normalisations with source evidence rather than broad estimates.
• Provide forecasts with the assumptions and drivers behind them.
• Identify known disputes, information gaps and unusual assets at the scoping stage.

A well-scoped valuation is not the longest report or the most complex model. It is the level of work needed to support the particular decision, with limitations made clear and evidence proportionate to the risk of reliance.

Selected references

– APESB – Valuation Services and APES 225

– APESB – Current pronouncements

– Australian Taxation Office – Market valuation for tax purposes

– Expert Business Valuations – Business valuation services

Editorial note and disclaimer: This article provides general information only. Fees and engagement types vary by provider, purpose, urgency, complexity and information quality. A written proposal and engagement letter should be obtained for the specific matter.