This week’s edition of Let’s Talk, our experts discuss how business owners can get an accurate valuation before considering a sale.
This week’s edition of Let’s Talk puts a question to our panel of experts: how do you get your business valued if you’re thinking about selling in the next few years?
Whether a sale is a firm plan or just an idea you’re turning over, knowing what your business is worth, and what drives that number, can shape decisions you make well before any deal is on the table. Here’s what our experts had to say.
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Nitesh Roopa, Managing Partner, ProfitPulse
“Do not wait until you are ready to sell. By then it is usually too late to capture full value, because the things a buyer actually pays for take years to build, not months.
Get an independent baseline valuation now, while a sale is still a few years off. Most owners carry one number in their head, and it came from their accountant in passing. Accountants are excellent at compliance, but valuation is a different discipline. It draws on transaction experience and how acquirers actually think.
The number itself is the least useful part. What matters is the gap. A proper valuation shows what the business is worth today and the specific levers that would move the multiple. The earlier the gap is known, the more time there is to close it.
Those levers are slow. Recurring revenue, low owner dependence, a spread of customers, clean financials. A buyer believes three years of consistent numbers far more than six months assembled for the sale.
Leave it until the final stretch and the value you never built becomes value the buyer never pays for. That is money left on the table.”
Dan Copsey, Co-founder and Director, Admosis Media Group
“One of the most important steps you can take if a sale is genuinely on the horizon is to obtain a professional valuation from a qualified business appraiser, accountant, or broker, rather than relying on a rough self-assessment.
Before the valuation, it’s also worth familiarising yourself with the different types of valuation approaches: income-based (valuing a business based on earnings or cash flow, often using a multiple of EBITDA or seller’s discretionary earnings), market-based (comparing the business to recent sales of similar businesses), and asset-based (calculating the net value of assets minus liabilities). The type of business you have and the industry in which it operates will determine the most appropriate valuation method.
It’s also worth noting that valuation isn’t just about the numbers. Factors such as recurring revenue, customer concentration, owner dependence, growth potential and the strength of the team can all influence a business’s value. That’s why it’s important not only to have your financial records in order well before a sale, but also to have a deep understanding of your business’s financial performance and key value drivers.
Finally, it’s worth seeking more than one valuation or professional opinion, as estimates can vary depending on the methodology used and the valuer’s perspective. Obtaining multiple valuations can provide a more balanced view of your business’s worth, highlight any significant discrepancies and help when negotiating with potential buyers.”
Morgan Wilson, Founder and Director, creditte accountants and advisors
“The best time to get your business valued was three years ago. The second-best time is now, because it gives you three years to plan and drive value before you exit.
Most owners get this backwards. They wait until they’ve decided to sell before finding out what the business is worth. By then, everything that costs value is already baked in and there’s no time left to fix it.
An early valuation isn’t about a dollar figure. It’s a diagnostic. It shows you the business a buyer will see, not the one you built. Buyers discount for owner dependency: if the business stops running the day you stop showing up, that’s a discount. They discount for customer concentration: if three clients make up half your revenue, that’s a discount. None of that shows up on a profit and loss statement.
Get valued now, even if selling is years away. You can’t fix what you don’t know is broken.”
Nadine Connell, Co-Founder, Director & Commercial Finance Expert, Smart Business Plans
“Most owners get a valuation, anchor on the multiple, then watch the deal collapse years later when the buyer’s lender won’t fund it.
I arrange the finance buyers need to complete these purchases, which puts me on the other side of the table from most exit advice. In most cases your business is worth what a bank is willing to lend against it, plus whatever cash a buyer can find. A valuation is an opinion. A credit decision is the bank committing its own money, and banks are far more conservative.
So get the formal valuation. Then ask a second question: if a buyer walked in tomorrow, what could they actually borrow to buy this?
The gap between those two numbers is your project for the next few years. Lenders could strip out add-backs you can’t evidence, so document every one. Some price in customer concentration, so diversify. Above all, be clear on whether the profit belongs to the business or to you, because owner dependence means part of what’s being sold walks out on settlement day. And if you lease your premises, sort the term early, well before a buyer is at the table.”
Jason Sprague, Partner – Corporate & Commercial, Bartier Perry
“Most people think of business valuation as just an accounting process, with valuations commonly prepared by accountants, business valuers, corporate advisers or M&A specialists. They will typically assess factors such as your revenue, profitability, growth prospects, customer relationships, recurring income, assets, market position and industry trends.
Most valuers use one or more recognised methods. For small businesses, the most common approaches are earnings multiple (based on adjusted profits), discounted cash flow analysis, or an asset-based valuation. The appropriate method will depend on the nature of your business and the availability of reliable financial information.
However, maximising value is not just an accounting exercise. Experienced legal advisers can play a critical role in preparing a business for sale and addressing issues that may affect a buyer’s willingness to pay a premium price.
Lawyers can help identify and rectify legal risks before a buyer’s due diligence process begins. This may include reviewing customer and supplier contracts, ensuring intellectual property is properly protected and owned, updating employment arrangements, resolving compliance issues, and improving corporate governance records. Buyers frequently discount their offers where legal risks, uncertain ownership rights or poor documentation are identified.
By obtaining an early valuation and engaging legal advisers well in advance of a sale, business owners can develop a strategic plan to enhance value, reduce transaction risks, and position the business for a smoother and more successful exit when the time comes.”
Dejan Pekic, Founder & Senior Financial Planner, Newealth
“Most business owners find out what their business is worth at exactly the wrong moment. A business valuation is essential for every business owner, at every stage – not just when you’re looking to sell.
When you build a business, the focus is on the business, and that’s understandable. But by not thinking about overall value, you risk minimising that value, and you may also put personal wealth at risk.
While an assessor can give you an estimate prior to a sale based on revenue, cash flow, assets, liquidation valuation and market capitalisation, you should ideally be thinking about business value from day one. A comprehensive financial strategy can help you minimise tax (a complex process) and consider other incentives to optimise your business position.
A valuation is central when you sell, during a merger or acquisition, and also during disputes – another crucial point. By not separating personal and business wealth, you may leave both vulnerable if there’s conflict with a business partner, a shareholder dispute or a divorce.
So, even if selling is on the horizon, expert financial guidance now can help you build business value, gain clarity around your finances and ensure your personal wealth is protected.”
Courtney Roe, Partner, McGrathNicol
“Valuations are inherently forward-looking. They focus on future cash flow generation, and the risks relating to those cash flows. As a strategic tool, a valuation can provide founders and owners with insight into which operational and financial drivers, together with broader market dynamics, are influencing the value of their business. Reducing unsystematic risk (diversifiable risk or risk that is unique to a particular business) and demonstrating growth enhances value.
Strategies to reduce risk include diversifying revenue streams, reducing customer or supplier concentration, reducing key person reliance by strengthening management teams, and putting in place good systems and processes. Demonstrating growth in revenues, earnings and cash flows implies sustainability of margins, scalability and good working capital management, which also have a positive impact.
Founders and owners who are thinking about selling in the next few years can benefit from engaging a valuation expert. This process can assist with identifying levers to pull to improve transaction readiness and enhance the overall value of their business.”
Angus Kilian, Regional Head – APAC, Middle East and Africa, Carta
“If selling is on the cards in the next few years, the work starts now, not when a buyer comes knocking. The first step is getting an independent valuation from a qualified professional. A valuation based on your financials and comparable transactions will carry far more weight in negotiations than a rough estimate. Repeat the exercise every year so you can see whether the changes you’re making are genuinely increasing the value of the business.
Next, get your cap table in order. Buyers pay for confidence, and a messy ownership register is one of the quickest ways to delay a deal or reduce the price. Clean financials and an unambiguous ownership record give businesses fewer reasons to negotiate the price down.
Our data shows almost half of Australian founders expect an exit to take five years or more. That sounds like plenty of time, but it disappears quickly. Use it to make the business less dependent on you, reduce customer concentration risk, and know what you’ll actually take home after debt and other obligations are paid. Having that walk-away number before negotiations begin puts you in control.”
Natasha Mandie, Founder and Managing Director, EM Advisory
“Business sales are rarely maximised just in the sales process. The strongest outcomes start years earlier.
Finding an acquirer typically takes 9–12 months, but the transaction is only part of the journey. Strong financial performance, disciplined execution, healthy margins, differentiated capabilities and customer relationships all strengthen a valuation.
But it’s those strategic decisions that align your journey with an acquirer’s strategic wish list that deliver the greatest value – well beyond just your financial performance.
Many founders also underestimate how dependent the business remains on them. Buyers will pay more if they have confidence the business will perform and thrive, even without the founder. A management team that is willing, backable and incentivised to stay is a key value driver.
Getting a business valued is about more than obtaining a number. Financial buyers assess performance and growth potential, while strategic acquirers focus on how your capabilities, products or customers advance their strategy. Understanding that difference can make a huge difference to your sale outcome.
At the end of the day, a valuation is a theoretical opinion. It’s the sale process, and finding a willing and enthusiastic buyer that will deliver a genuinely life changing sale outcome.”
Jane Carey, Managing Director, Carey Advisory
“Many business owners wait until they are ready to sell before understanding what their business is worth, by which point opportunities to improve value may have been missed.
Planning several years ahead is critical to achieving the best outcome. Buyers look beyond current profits, assessing future earnings potential, customer strength, reliance on the owner, team capability, systems quality and overall risk.
A valuation from an experienced business sales specialist can identify key value drivers and risk areas. While accountants provide essential financial advice, business sales consultants offer market insights gained from working directly with buyers and understanding purchaser expectations.
Working with a trusted advisor or business coach in the lead-up to a sale can also help strengthen value drivers, reduce risk, and position the business for maximum market appeal.
Understanding your current value is the first step to maximising what your business is worth at exit, followed by consistent, focused planning to grow that value to maximise the sale price you will achieve.”
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