Insight
How much does a business valuation cost in Australia?
The cost of a business valuation depends on the question the report must answer and the work needed to support the conclusion. There is no single fee that usefully covers every Australian business, shareholding and valuation purpose.
A quote is most useful when it explains the scope, deliverable and assumptions behind the fee. Before comparing prices, check that the proposed work is suitable for the decision you need to make.
What affects the fee?
These are useful matters to cover in an initial scoping discussion:
- Purpose and intended users. Is the work for your own planning, a proposed transaction, a shareholder matter, financial reporting or another defined use? Reporting and reliance requirements can differ.
- The interest and valuation date. A whole operating business, a particular parcel of shares and several interests at different dates are different assignments.
- Business structure. Multiple entities, intercompany balances, different share classes or significant non-operating assets can require additional analysis.
- Information quality. Clear financial records and explanations help. Reconciling inconsistent accounts, investigating missing records or assessing unsupported forecasts takes work.
- Commercial complexity. An established business with stable trading raises different questions from a loss-making venture or a business undergoing substantial change.
- Additional deliverables. Clarify whether meetings, responses to third-party questions, updated valuation dates or attendance in a dispute are included.
Compare the assignment, as well as the price
Two documents described as a “valuation” may offer different levels of investigation and explanation. Ask what financial periods will be considered, how management information will be assessed, and how the report will explain its methods and assumptions.
Also establish who may rely on the report. An estimate prepared for an owner’s internal planning may not address the instructions needed for a specific transaction, tax matter or dispute. Read our guide to business valuations and appraisals for the questions to ask.
A practical comparison
Imagine two owners requesting a valuation. The first has one operating company, reconciled accounts and a clearly defined valuation date. The second has three related companies, an owner loan that does not reconcile, and a proposed transfer involving two share classes.
Even if their annual sales are similar, the second assignment presents more questions about the subject interest and the financial information. Revenue alone would be a poor way to compare the work. This example is illustrative; it is not a fee schedule or an assessment of either business’s value.
What should a written quote clarify?
- The entities, assets or ownership interests covered.
- The valuation purpose, date, intended users and report format.
- The information you are expected to supply and any exclusions.
- Whether the fee is fixed, estimated or charged on another agreed basis.
- How GST, specialist input, expenses and changes in scope are treated.
- The delivery assumptions, review process and treatment of follow-up questions.
A lower price does not establish that a proposal is unsuitable, and a higher price does not establish quality. The useful comparison is whether each proposal addresses the same question with an appropriate process and clear limitations.
How to prepare for a fee discussion
Send a short description of the business, the purpose of the valuation, the ownership interest, the relevant date and any deadline. Indicate whether recent accounts, management reports and ownership documents are available. Our document checklist can help you prepare.
Start with a high-level enquiry and agree a secure exchange method before sending confidential records. Organised information may reduce avoidable follow-up work, but it does not replace the analysis the engagement requires.
For the broader preparation process, the Australian Government’s business valuation guide explains the role of financial and commercial information.
Request a quote for your circumstances
Evident Valuations is based in Milsons Point, Sydney, and supports clients across Australia. Explore our business and share valuation services or request a consultation to discuss the work needed before a fee and timing are agreed.
Related reading
General information only. The appropriate valuation approach and requirements depend on the circumstances, agreed scope and intended use. This article is not a valuation of a particular business or individual legal, tax or financial advice.
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