Business Valuation Calculator — Australia 2026-27
Four ways to price a business — an EBITDA multiple, net assets, a revenue multiple and a discounted cash flow — side by side, with equity value after net debt and a sensitivity band across the multiples a buyer might argue for.
The headline method is an EBITDA multiple: enterprise value is normalised EBITDA times the multiple a comparable business sold for.
| EBITDA ×4.0 | $2,000,000.00 |
|---|---|
| DCF | $4,221,437.35 |
| 2× | $1,000,000.00 |
|---|---|
| 3× | $1,500,000.00 |
| 4× | $2,000,000.00 |
| 5× | $2,500,000.00 |
| 6× | $3,000,000.00 |
| 7× | $3,500,000.00 |
| 8× | $4,000,000.00 |
How the business valuation works
The headline method is an EBITDA multiple: enterprise value is normalised EBITDA times the multiple a comparable business sold for. Normalise first — add back the owner's above-market salary, one-off legal costs and any private expenses, because the buyer is pricing the earnings the business will make without you. Equity value is enterprise value less net debt, which is the number that reaches the seller. Net assets set a floor for an asset-heavy business and mean little for a service business whose value walks out at five o'clock. The revenue multiple is a cross-check, most useful where margins are still moving. The DCF discounts free cash flow (taken here as 75% of EBITDA) over your forecast period and adds a terminal value at the perpetuity growth rate, discounted at your WACC — it is the most defensible method and the most sensitive to its own assumptions. Most small Australian businesses trade between two and five times EBITDA; the concessions available on sale (the 15-year exemption, the 50% active asset reduction, the retirement exemption and the rollover) turn on the $6 million net asset value test or the $2 million turnover test, so the after-tax result can differ sharply between two otherwise identical sales.
Formula: EV = EBITDA × multiple · equity = EV − net debt · blended = (EV + net assets) ÷ 2 · DCF = Σ FCF ÷ (1 + r)ⁿ + TV ÷ (1 + r)ᴺ
Australia Business Valuation Notes
Method 1: EBITDA multiple (most common for SME)
Enterprise Value = EBITDA × multiple. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is the standard measure of operating profitability used in Australian business sales. The multiple reflects risk, growth, and marketability. Australian SME multiples typically range from 2× to 6×, with tech and SaaS businesses attracting 8–15×.
Method 2: Net asset value (NAV)
The sum of the business assets minus all liabilities. This is the floor value — what the business is worth if wound up. Asset-heavy businesses (manufacturing, property, farming) often trade close to NAV. Service businesses with strong earnings usually trade at a premium to NAV (i.e., goodwill).
Method 3: Revenue multiple
Used for high-growth or subscription businesses where EBITDA may be low or negative. SaaS businesses typically trade at 4–10× ARR. The revenue multiple implies the buyer is paying for growth potential, not current earnings. This method is less common for traditional SMEs.
Method 4: Discounted Cash Flow (DCF)
Projects future cash flows and discounts them to present value using a risk-adjusted rate (WACC). Theoretically the most rigorous method, but requires reliable forecasts — rare for SMEs. More commonly used in large M&A deals, private equity, and for businesses with strong recurring revenue visibility.
| Method | Best for | Typical range (AU) |
|---|---|---|
| EBITDA multiple | Profitable SMEs $500k–$50M revenue | 2–6× EBITDA |
| Revenue multiple | SaaS, subscriptions, high-growth | 4–10× ARR |
| Net asset value | Asset-heavy, property, farming | 1–1.3× book value |
| DCF | Large deals, PE-backed, strong forecasts | 12–20% WACC typical |
What multiple should your business attract? Industry benchmarks for Australian SMEs
| Industry / business type | Typical multiple | Key value drivers |
|---|---|---|
| SaaS / software | 8–15× EBITDA | Recurring revenue, low churn, scalability |
| Healthcare / medical | 5–8× EBITDA | Repeat patients, staff retention, location |
| Professional services (systemised) | 4–6× EBITDA | Client contracts, staff depth, recurring fees |
| Retail (online or physical) | 3–5× EBITDA | Brand, supplier terms, defensibility |
| Manufacturing | 3–5× EBITDA | IP, contracts, equipment condition |
| Trade / construction | 2–4× EBITDA | Contracts, staff, licensing |
| Hospitality / cafe / restaurant | 1.5–3× EBITDA | Lease terms, location, systems |
| Owner-dependent services | 1.5–3× EBITDA | Staff transition, key-person insurance |
What increases your multiple?
- Recurring or contracted revenue (subscription, retainer, contracts)
- Management depth — business runs without the owner
- Diversified customer base (no single client > 20% revenue)
- Strong growth trajectory (3-year revenue growth trend)
- Defensible IP, brand, licences, or location
- Clean financials and up-to-date tax obligations
What decreases your multiple?
- Owner-dependent operations — business is the owner
- Customer concentration — top 3 clients are 80%+ of revenue
- Declining revenue or inconsistent EBITDA
- ATO debt or compliance issues
- Poor lease terms, upcoming lease expiry
- Narrow buyer pool (specialised, licensed, niche)
How to calculate normalised EBITDA for a business sale in Australia
EBITDA formula
EBITDA = Net profit + Interest + Tax + Depreciation + Amortisation
Or equivalently: Revenue − COGS − Operating expenses (excluding ITDA)
Normalised EBITDA for M&A purposes
When selling a business, buyers and sellers typically work with normalised EBITDA — adjusted to remove one-off items and owner-specific costs. Common add-backs:
- Excess owner salary (above market rate for a manager to replace them)
- Owner personal expenses run through the business
- One-off legal costs, restructuring costs, or non-recurring expenses
- Related party rent at above or below market rates
- Non-arm's-length supplier or customer transactions
Example normalisation
| Item | Amount |
|---|---|
| Reported net profit | $280,000 |
| + Interest expense | $30,000 |
| + Tax (company rate) | $90,000 |
| + Depreciation | $40,000 |
| + Amortisation | $10,000 |
| = Reported EBITDA | $450,000 |
| + Owner salary add-back (excess) | $80,000 |
| + Personal expenses add-back | $20,000 |
| = Normalised EBITDA | $550,000 |
The sale process, CGT on business sale, vendor finance, and earn-outs in Australia
The typical Australian business sale process
- Prepare financials — 3 years of P&L, tax returns, normalised EBITDA
- Engage a business broker or M&A adviser (for larger deals)
- Prepare Information Memorandum (IM) — confidential marketing document
- Market to qualified buyers — NDAs required
- Indicative offers / Letter of Intent (LOI)
- Due diligence — buyer verifies financials, contracts, liabilities
- Negotiate final price and structure
- Legal documentation — Sale of Business Agreement (SBA)
- Settlement — funds transfer, key handover
- Transition period — seller remains for 3–12 months
Capital Gains Tax on business sale
When you sell a business in Australia, the profit is usually subject to CGT. Key concessions for small business owners: 50% CGT discount if held 12+ months (individuals and trusts); Small Business CGT Concessions — if the business has less than $6M in net assets (or turnover under $2M), you may qualify for the 15-year exemption, retirement exemption, or rollover. Always get tax advice from a CA before selling.
Vendor finance and earn-outs
In Australian business sales, it is common for the seller to provide vendor finance (typically 20–30% of the purchase price) repaid over 2–3 years. Earn-outs — where part of the price is contingent on future performance — are also common to bridge valuation gaps between buyer and seller expectations.
Frequently asked Frequently asked questions
What EBITDA multiple is typical for an Australian SME in 2026?
Most Australian SMEs sell for 2–6× EBITDA. The multiple depends heavily on: how owner-dependent the business is, revenue quality (recurring vs one-off), growth trajectory, industry, customer concentration, and management depth. Owner-dependent businesses attract 2–3×; systemised businesses with strong recurring revenue attract 4–6×. Tech and SaaS businesses can attract 8–15×.
What is the difference between enterprise value and equity value?
Enterprise value (EV) is the total value of the business — what a buyer pays for the whole business including its debt. Equity value = EV minus net debt (loans and overdrafts, minus cash). When buying a business, the buyer typically pays the equity value but assumes the business free of debt. Always clarify whether a quoted price is EV or equity value.
How is goodwill calculated when selling a business?
Goodwill = Enterprise value minus the fair value of tangible net assets. If your business is valued at $2,000,000 and has net tangible assets of $500,000, the goodwill component is $1,500,000. Goodwill reflects the value of brand, customer relationships, systems, staff, and earnings power above the asset base. CGT treatment of goodwill varies — get advice from a CA.
Do I need a formal business valuation to sell?
A formal valuation from a Chartered Business Valuator or CA with M&A experience is not legally required but is strongly recommended — especially for businesses valued above $500,000. A formal valuation helps justify your asking price, supports vendor finance arrangements, and may be required by the buyer's lender. Business brokers typically provide indicative valuations for free as part of their listing process.
Where these figures come from
Business figures on this page are drawn from the Australian Taxation Office (business tax, GST, PAYG), Business.gov.au (the federal business registration hub), Fair Work (employer obligations), and ASIC (company and director rules).
- Company tax rate (25% / 30%) — ATO — Company tax rates.
- GST rules (10%) — ATO — GST.
- PAYG withholding & employer obligations — ATO — PAYG withholding.
- Business registration (ABN/ACN) — Business.gov.au.
- Employer pay & award obligations — Fair Work Ombudsman.
- Company & director rules — ASIC — Companies.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
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SME — $500k EBITDA × 4× multiple EV: $2.0M · Asset blend: varies
A profitable Australian SME generating $500,000 EBITDA valued at a 4× multiple: Enterprise Value = $2,000,000. A 4× multiple is typical for a stable, owner-managed service business with some systems and recurring revenue.
| EBITDA | $500,000 |
|---|---|
| EBITDA multiple | 4.0× |
| Enterprise value (EV) | $2,000,000 |
| Revenue multiple (est. at 15% margin) | ~0.6× revenue |
| Seller finance common? | Yes — 20–30% vendor finance typical |
| Broker fee (est.) | ~$80,000–$100,000 (4–5%) |
- If multiple rises to 5× $2,500,000 (+$500k)
- If multiple falls to 3× $1,500,000 (−$500k)
- Net debt adjustment Subtract debt, add cash to get equity value
- Working capital peg Normalised working capital often negotiated
- Earn-out component Often 10–20% of price tied to future performance
SaaS / Tech — $1M ARR × 8× revenue EV: $8M · High-growth premium
A SaaS business with $1,000,000 ARR (Annual Recurring Revenue) valued at 8× revenue: Enterprise Value = $8,000,000. SaaS businesses attract higher multiples due to recurring revenue, low churn, and scalability. At 20% EBITDA margin, the implied EBITDA multiple is 40×.
| ARR / Revenue | $1,000,000 |
|---|---|
| Revenue multiple | 8.0× |
| Enterprise value | $8,000,000 |
| Implied EBITDA multiple (20% margin) | 40× |
| Churn requirement for 8× | <3% annual churn typical |
| Growth rate expected | 30%+ YoY to justify premium |
- If revenue multiple drops to 5× $5,000,000 (−$3M)
- If churn is high (10%+) Multiple compresses to 2–4×
- Strategic buyer premium May pay 20–40% above financial buyer
- Australian SaaS exits 2024 Typically 4–10× ARR for established
- ATO note Capital gain on sale — 50% CGT discount if held 12+ months
Trade business — $300k EBITDA × 3× EV: $900k · Owner-dependent risk
A trade business (plumbing, electrical, construction) generating $300,000 EBITDA valued at a 3× multiple: Enterprise Value = $900,000. Trade businesses typically attract lower multiples due to owner-dependence and key-person risk. Systemisation and staff depth can increase the multiple.
| EBITDA | $300,000 |
|---|---|
| Multiple | 3.0× (owner-dependent discount) |
| Enterprise value | $900,000 |
| Vehicles/equipment (net assets) | Often $100k–$300k included |
| Revenue multiple (est.) | ~0.3–0.5× revenue |
| Goodwill component | ~50–60% of price |
- If systemised with managers Multiple rises to 4–5×
- Recurring contracts in place +0.5–1× premium on multiple
- Licence / certification required Narrows buyer pool — slight discount
- Vendor finance Common — 20–30% over 2–3 years
- Seller transition period Usually 3–12 months handover
Multiple valuation methods explained EBITDA, asset, DCF, revenue
Professional business valuations rarely use a single method. Australian brokers and M&A advisers typically cross-check using 2–3 methods: EBITDA multiple, net asset value, and (for growth businesses) DCF or revenue multiple. The final price is negotiated between buyer and seller.
| EBITDA multiple | Most common for SME ($1M–$50M) |
|---|---|
| Net asset value | Floor value — asset-heavy businesses |
| Revenue multiple | Growth / SaaS / subscription businesses |
| DCF (discounted cash flow) | Larger deals, forecasts available |
| Rule of thumb | Industry-specific (e.g. 1× GRR for accounting) |
| Cap rate (property) | Net income ÷ cap rate for property businesses |
- EBITDA multiple range (AU SME) 2–6× typical; 6–15× for tech/SaaS
- Net asset premium/discount Going concern > liquidation value
- DCF discount rate (WACC) Typically 12–20% for SME
- Earn-out structures Bridge valuation gaps — common in AU
- Get a formal valuation Chartered Business Valuator or CA (Fin)
Worked examples
| Inputs | Enterprise Value (EBITDA method) | Note |
|---|---|---|
| 500,000 EBITDA on a 4× multiple | $2,000,000 | a 2,000,000 enterprise value |
| The same earnings with 400,000 of net debt | $2,000,000 | equity value falls to 1,600,000 — the debt comes off the seller |
| An asset-heavy business worth 1,200,000 on the books | $2,000,000 | the blended value splits the difference at 1,600,000 |
The sources behind this calculator
- Corporate Finance Institute — EBITDA — why EBITDA is a non-GAAP measure with no single definition
- US SEC — Non-GAAP Financial Measures, Compliance & Disclosure Interpretations — the disclosure rules that exist precisely because EBITDA is not standardised
- Australian Securities and Investments Commission — the Australian corporate regulator
Last checked: September 2026. These are standard management-accounting definitions; where a term has no single agreed definition, the page says so.