What Is My Business Worth? A Realistic Guide for Australian Owners

Every week I speak to business owners who have a number in their head. Sometimes it came from a broker. Sometimes it came from a mate who sold a similar business. Sometimes it came from multiplying their revenue by something they read online. Almost always, it's too high.

This isn't a guide to getting a higher valuation. It's a guide to understanding what a buyer will actually offer, and why. Once you know the real number, you can work backwards and decide what, if anything, you want to do about it.

Start with what buyers actually pay for

Buyers don't buy revenue. They don't buy profit. They buy adjusted, normalised earnings: what the business will generate after you leave, run by a professional manager, with no lifestyle expenses buried inside it.

The starting point is EBITDA (earnings before interest, tax, depreciation, and amortisation). From there, a buyer will apply what's called a recasting: essentially reconstructing your P&L as they would run it. This typically involves:

• Adding back your owner's salary above market rate (if you pay yourself $300k in a role a manager would do for $120k, $180k gets added back)
• Removing personal expenses run through the business (vehicle, phone, travel with a personal component)
• Removing non-recurring one-off items (a lawsuit settlement, a flood insurance payout)
• Adding back genuine one-off costs that won't repeat (a legal dispute now resolved)
• Normalising rent if you own your premises and pay yourself below or above market

The multiple: where your real valuation lives

Once a buyer has adjusted EBITDA, they apply a multiple. This is where most conversations go wrong because owners hear "5× EBITDA" for some business and assume the same applies to theirs.

In practice, Australian small business multiples typically range from 1.5× to 5×, with the majority of transactions below $5M sitting in the 2–3.5× band. What drives your multiple up or down:

Factor	Lower multiple	Higher multiple
Owner dependency	Business can't run without you	Strong management team, systems, SOPs
Customer concentration	Top 3 customers = 60%+ of revenue	Diversified, no single customer >15%
Revenue quality	Project-based, lumpy, unpredictable	Recurring contracts, subscriptions, retainers
Revenue trend	Flat or declining 2+ years	Consistent growth, documented reasons
Financials	Mixed with personal, informal records	Clean, externally prepared, 3+ years
Industry	Declining sector, regulatory risk	Growing sector, defensible position

Who's buying, and why it changes everything

The same business is worth different amounts to different buyers. A trade competitor who can immediately eliminate overhead and cross-sell your customers might pay 4×. A first-time individual buyer taking on a full-time job might pay 2.5×. A private equity roll-up might pay 3.5×, but with 40% deferred into an earnout.

The three main buyer types for Australian small businesses:

Individual buyers (owner-operators)

Typically buying a job as much as an investment. They're often the highest percentage of enquiries but the lowest conversion to completion. They're constrained by bank finance (usually 50–70% LVR on business assets), and they'll spend 3–6 months doing their own due diligence. They tend to pay the lowest multiples but close the simplest deals.

Strategic / trade buyers

Competitors, complementary businesses, or suppliers who want your customers, staff, or capabilities. They often pay the highest multiples because synergies make your EBITDA worth more to them than it is standalone. The downside: they have information leverage, and their due diligence is deep. Negotiating with a direct competitor requires careful management of what you share and when.

Financial buyers (private equity, search funds)

Increasingly active in the Australian market for businesses with $500k+ EBITDA. They're disciplined, fast, and use leverage. They will offer the best-looking headline number and the most complex deal structure. Earnouts, rollover equity, management incentive schemes. If you're not experienced in M&A, the headline number and the actual cash you walk away with can be very different things.

The worked example most brokers skip

Let's say you run a B2B services business. Your accountant-prepared P&L shows $600k profit. You pay yourself $280k. A replacement manager would cost $150k. You run $40k of personal expenses through the business. Your rent is at market. Revenue has been flat for two years.

A buyer's recast might look like this:

Item	Amount
Reported profit	$600,000
Add back: excess owner salary ($280k − $150k market)	+$130,000
Add back: personal expenses	+$40,000
Less: add depreciation (already in EBITDA)	+$20,000
Adjusted EBITDA	$790,000

Against that $790k adjusted EBITDA, with flat revenue, no management team, and moderate customer concentration, a realistic multiple is 2.5–3×. That gives a valuation range of $1.975M–$2.37M, before considering deal structure, how much is paid upfront, and the impact of earnouts.

What actually moves the number

In our experience, the three things that most reliably move a business valuation upward (and that owners actually have control over) are:

1. Reducing owner dependency. If the business depends on your relationships, your knowledge, or your physical presence, every buyer discounts for risk. Building a management layer, documenting processes, and demonstrating the business can run for 3–6 months without you directly is one of the highest-ROI preparation activities.

2. Cleaning and preparing your financials. Buyers pay for certainty. Mixed personal and business expenses, aggressive tax minimisation, and informal record-keeping all create uncertainty, which buyers price in. Three years of clean, externally prepared financials that tell a coherent story are worth real money at the negotiating table.

3. Improving revenue quality and trend. A business with three years of 10% annual growth, documented in the financials and attributable to specific causes, attracts a materially higher multiple than one with flat or unexplained growth. If you can demonstrate a credible growth path, buyers will price the upside.

The honest bottom line

Your business is probably worth what a prepared buyer will actually pay for it, not the number that makes sense based on what you put in, what you need to retire, or what your broker told you to attract listings.

Knowing the real number, the real structure, and the real drivers of value is how you prepare properly and how you avoid spending 18 months in a process only to discover at the eleventh hour that the deal economics don't work.

If you'd like to run the numbers on your business, honestly and without a sales pitch attached, that's what we do.