Free tool

Melbourne Business Valuation Calculator

Enter your own figures and see a value range for your business using the four methods a certified valuer works with, with every step of the arithmetic on screen.

This free calculator gives a Melbourne business owner a value range using four methods: capitalisation of earnings, discounted cash flow, a market multiple and adjusted net assets. Because you enter a low and a high rate or multiple, the result is a range rather than one figure. It is a teaching tool and not a valuation.

Calculate the value of your business

Choose a method and enter your figures

Select a method, type in your own numbers and the range recalculates as you go. Nothing leaves your browser and you will not be asked for an email address to see the result.

Your figures

The starting figures are placeholders for illustration only. Replace them with your own, and enter both a low and a high rate so the result reads as a range rather than a point.

Step 1. Normalise your earnings

The profit in your accounts shows how the business is run for you, not what a buyer would inherit. Normalising brings it to that buyer's view. Enter add-backs as positive numbers and deductions as negatives.

A$
A$
A$
A$
A$
Maintainable earnings A$0

Step 2. Capitalisation rate

%
%
Equity bridge, optional

A capitalisation rate or a multiple gives enterprise value, the value of the operations to lenders and owners together. Take off the debt and add any surplus assets to see what the owner would actually receive.

A$
A$

Enterprise value range

Enterprise value
Less interest-bearing debt
Plus surplus assets
Equity value

What this does not include

  • Any discount for a minority holding or for an interest that is hard to sell
  • A view on whether the earnings you entered can be sustained
  • Evidence from comparable sales chosen for your sector, size and suburb
  • The share of goodwill that is personal to you and would leave with you
  • Adjustments for working capital, the lease, tax and contingent liabilities
Everything runs in your browser. Nothing you type is transmitted or kept. Speak to a certified valuer

This is not a valuation

The calculator does arithmetic on the numbers you give it and nothing more. It has not seen your financial statements, cannot tell whether your earnings will hold up, does not choose comparable transactions, and applies no discount for a minority holding or for an interest that is hard to sell. It is a general educational tool, not financial, legal or valuation advice, and it must not be relied on for a sale, a court matter or a tax position.

When someone else has to rely on the number, we prepare one of three reports. An Indicative valuation is for internal decision-making and is not written for third party reliance. A Summary report sets out the approaches applied and the reasoning behind them. A Detailed report applies and reconciles all relevant approaches in full, for review by a court, the ATO, a lender or another expert.

The methods

What the four methods are doing behind the form

Capitalisation of earnings

Takes one year of maintainable earnings and divides it by a capitalisation rate. Right for an established business, a Box Hill dental practice for instance, whose recent years are steady enough for one of them to stand for the future.

Income approach

Discounted cash flow

Projects cash flow year by year and discounts each year back to today. Right for a business whose path is changing, such as a Cremorne software firm still growing or a contractor whose main contract ends in year three.

Income approach

Market multiple

Applies a multiple taken from comparable sales to maintainable earnings. Its reliability rests entirely on the transactions behind the multiple, and those are the one thing a calculator cannot supply, for a Fitzroy cafe or anything else.

Market approach

Adjusted net assets

Brings every asset to market value and takes off the liabilities. Leads for a plant-heavy business such as a Dandenong South fabricator, and marks the floor in every other valuation.

Asset approach
Limits

Where the arithmetic stops and judgement begins

Arithmetic is the least of a valuation. The number is decided by judgement: whether the earnings you typed in will keep coming, which of last year's sales in the inner north or the south-east genuinely resemble your business, how much of the goodwill is personal to you, how long the lease has to run if you trade from premises covered by the Retail Leases Act 2003 (Vic), and how much of the revenue comes from a handful of customers. A form cannot hold any of that.

The capitalisation rate shows the problem most clearly. In an engagement it is assembled from a risk-free rate taken from long-dated Australian Government bond yields, an equity risk premium, a size premium, an industry premium and a loading for the risks specific to your business. In the calculator you simply type it. Choose a rate that is a few points off and the result is off by the same proportion, however precise the figure on screen looks.

The same limitation is why a broker's rule of thumb, a flat multiple of turnover or of gross fees, can only ever be a sense-check. It treats a high-margin business and a struggling one alike, and profitability and risk are exactly the two things that separate businesses of the same size in the same trade.

Questions

Calculator questions, answered

Begin with maintainable earnings: take reported profit and adjust it for a market salary in place of your own drawings, arm's length rent, and anything that will not recur. Then apply one of three tests: divide those earnings by a capitalisation rate, multiply them by a multiple drawn from comparable sales, or forecast the cash flows and discount them. That gives enterprise value. Take off interest-bearing debt and add surplus assets to reach the equity value you would actually receive.
No. It is a teaching tool that performs arithmetic on whatever you enter. It has not looked at your accounts, tested your assumptions, selected comparable transactions or applied discounts for control or marketability. A valuation is a written opinion from a qualified valuer who will stand behind it and defend it. Even our Indicative report, the lightest of the three report types, is for internal decision-making and is not written for third party reliance.
Because a single figure suggests a precision that no valuation method can deliver. You type in a low and a high rate or multiple, and the calculator works out the value at each end. That mirrors what a valuer does: conclude on a range first, narrow to a point only where the purpose demands one, and explain in words why the weighting sits where it does.
Usually equity value, because that is the owner's share. Enterprise value is what the trading operations are worth to lenders and owners together, and it is what a multiple or a capitalisation rate produces. Equity value is what remains after interest-bearing debt is deducted and surplus or non-operating assets are added. The calculator shows that bridge as a separate step so the two are never confused.
That is the judgement a calculator cannot make for you. A capitalisation rate is assembled from a risk-free rate, an equity risk premium, a size premium, an industry premium and a company-specific loading for things such as customer concentration and dependence on the owner. A multiple has to come from real comparable transactions narrowed by industry, size, growth and location, not from a rule of thumb heard at a trade show.
Because the profit in your accounts reflects your choices as owner, not what a buyer would inherit. Your own drawings are replaced with a market salary for the role, rent paid to a related entity is restated to market, one-off items are removed and income from assets the business does not need is taken out. Normalisation is where valuers most often disagree with each other, which is why it is a visible step here rather than a hidden one.
No. A property settlement in the Federal Circuit and Family Court of Australia, whether filed in the Melbourne or Dandenong registry, a small business CGT concession claim with the ATO, or a shareholder dispute in the Supreme Court of Victoria each needs a written opinion from a certified valuer who has examined the records and will defend the conclusion. The calculator can help you understand the shape of the answer before that conversation, and nothing more.
No. It is plain JavaScript that runs inside your browser. Nothing you type is transmitted, logged or stored anywhere, and you will not be asked for an email address or a phone number to see the result.
Exactly as accurate as the assumptions you give it, no more, which is why it returns a range and shows its working. It cannot judge the quality of your earnings, the concentration of your customers, the strength of your lease or whether your goodwill would survive a change of owner. Use it to frame a conversation with your accountant or with us, not to price a deal.
Keep reading

Where to go next

Methodology The three valuation approaches By sector Business valuation by industry in Melbourne Report depth Indicative, Summary and Detailed reports
Certified Valuations

Certified Valuation Reports From Seven Business Days

When the number has to be defended, a calculator is not enough. Every report is signed by a credentialed certified valuer and built to withstand ATO, ASIC, court and bank scrutiny.

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