Do I need a valuation before selling my industrial business?

What does a valuation do for a seller?

It shows you the business the way a buyer's accountant will see it, before they do. For an industrial business that means four things.

• Earnings that hold up. Which add-backs a buyer will accept, and which will be challenged in due diligence.
• The plant bill. Whether machines or trucks due for replacement will be deducted from the price, and how equipment finance is paid out at completion.
• Working capital. The level of stock, work in progress and debtors a buyer will expect to be left in the business, which often becomes a price adjustment.
• Risks a buyer will price. Customer concentration, a short lease, owner dependence or approvals tied to particular people.

With that in hand, you can set an asking price grounded in evidence, fix what can be fixed, and judge offers and deal terms such as earn-outs or vendor finance against a reasoned figure rather than a hope.

When is a valuation effectively required?

Some sales bring tax rules into play that turn on market value. Your accountant decides whether a formal valuation is needed; we do not give tax advice. Common situations include:

• A sale to family or a related entity. If the parties are not dealing at arm's length and the price differs from market value, the market value substitution rule in the tax law can treat the seller as having received market value instead.
• The small business CGT concessions. One of the eligibility tests, the maximum net asset value test, is measured on the market value of the CGT assets of you and certain related entities and affiliates, less related liabilities, against a limit of $6 million just before the sale.
• A restructure before the sale. Moving the business, plant or property between group entities first can require values at the transfer date.
• A sale between shareholders. Many shareholders agreements set out how the price is fixed, sometimes by an independent valuer.
• A sale after 1 July 2027. From that date the 50% CGT discount for individuals, trusts and partnerships is replaced for gains that accrue after it, so an owner who sells later may need a market value at 1 July 2027. See the 2027 CGT changes.

Our tax and restructuring valuation page covers these situations in more depth.

When should I get it, and what does it cost?

Ideally a year or more before you go to market, so there is time to renew a major contract, extend a lease, tidy the equipment register or clear old stock before a buyer looks. A valuation close to the sale still has value as a check on the broker's appraisal and on the offers that come in.

Fees are fixed by annual turnover. Turnover under $2 million: From $1,495 + GST. Turnover $2 million to $10 million: From $2,495 + GST. Larger and more complex businesses are on our pricing page. Read more on our business sale valuation page, or request a quote.