Industrial business valuation

What exactly is valued, and at what date?

It is a written opinion of what an industrial business, or an interest in it, is worth at a stated date, prepared by an independent valuer for a stated purpose and set of users. The usual standard is market value: the price a willing but not anxious buyer and seller, both properly informed, would agree in an arm's length deal. The report states the date, the exact interest valued (the whole business, all the shares, or one shareholder's parcel), the method, the adjustments and the evidence, so the conclusion can be tested.

What makes it an industrial valuation is the analysis behind the number. A manufacturer, a fabricator or a transport operator earns its money through plant, people and contracts in a way a consultancy or a shop does not, and the valuation has to follow that. The approach is set out in full on how we value industrial businesses.

Who needs one?

• Owners selling or planning a handover, who want an evidence-based price before going to market. See business sale and succession valuations.
• Buyers testing a vendor's adjusted EBITDA before they sign. See acquisition valuations.
• Shareholders entering or leaving, under a shareholders agreement. See shareholder valuations.
• Accountants and tax advisers who need a market value for a related-party transfer, a restructure or the small business CGT concessions. See tax and restructuring.
• Lawyers and executors dealing with disputes and deceased estates. See dispute valuations. Family law matters are prepared through our dedicated family law practice, Family Law Valuations; see our family law page.
• Lenders and investors, as named users of a report commissioned by the business or the buyer.

All of these are set out on our business valuation services page.

What makes industrial businesses different to value?

• Capital intensity. EBITDA is measured before the plant wears out. A business that must keep replacing presses, CNC machines, trucks or forklifts to hold its earnings is worth less than its EBITDA alone suggests.
• Capacity. A plant running near full capacity needs new capital to grow. One running at half capacity has room, if the orders exist. The same earnings carry different prospects.
• Working capital. Stock, work in progress and debtors to large customers on long terms tie up cash, and a buyer expects a normal level of it to be left in the business.
• Customers and contracts. A workshop servicing one mine, or a carrier moving freight for one manufacturer, lives on that customer's decisions. A written supply agreement with a term is worth more than rolling purchase orders.
• Certifications and approvals. ISO 9001, AS/NZS ISO 3834 welding certification, supplier approvals and Defence Industry Security Program membership can be the price of entry to the best customers.
• People. When the owner is the chief estimator or the only person who knows the tooling, part of the value walks out the door with them.
• Equipment finance and cycles. Finance on the plant is debt that comes off the value, and earnings tied to commodities, construction or agriculture have to be read across a cycle, not a single good year.

Owning $3 million of machinery does not automatically add $3 million to enterprise value. Plant matters because of the earnings it produces and the capital it will need.

None of these factors is simply added to a multiple. They interact. One dominant customer is a bigger risk when the equipment is so specialised it cannot be turned to other work, and a long-term contract is worth less when the plant that serves it is due for replacement. That is why industrial valuation needs judgement rather than a rule of thumb. Our industry pages go into the detail for manufacturing, engineering, transport and logistics and mining services, among others.

What do you get?

• A written report with the value of the business or the interest at a stated date, for a stated purpose.
• Normalised earnings, with every adjustment to the accounts explained, including the owner's role costed at market and related-party rent and hire reset to market.
• The treatment of plant, sustaining capital spending, working capital and any surplus assets.
• The customer, contract, key-person and industry risks that shaped the result.
• The method used, the cross-checks, and the assumptions and limitations.

You see a draft to check the facts, sign a representation letter confirming the information you supplied, and receive the final report through the client portal. The sample report shows the structure.

How much does an industrial business valuation cost?

Delivery time starts once payment and all required information have been received. We confirm the fee in writing before we start. No hourly billing. Each additional valuation date is $495 + GST and each additional entity is $795 + GST. Family law matters are priced by Family Law Valuations. More detail is on our pricing page.

How do you start?

1. Tell us the industry, the purpose, approximate turnover and your timing, through the quote form or on 0433 475 518 (Mon to Fri, 9am to 5:30pm AEST). No documents at this stage.
2. A valuer calls to understand the business and the purpose, and tells you which report fits.
3. We confirm the scope and the fixed fee in writing.
4. You upload documents through the private link on your matter. Nothing is sent by email.
5. You receive a draft to check, sign the representation letter, and receive the final report.

Your information stays confidential, and we can sign a confidentiality undertaking before sensitive documents are shared. Most valuations are completed from documents and conversations; if the operation or the equipment needs to be seen, we say so when scoping and agree any visit and its cost first. Tell us your deadline and we will tell you on the call whether we can meet it.

Why use a specialist industrial valuer?

Any competent valuer can read financial statements. The difference is knowing what to ask next: how old the main machines are and what replacing them costs, whether the largest customer has a contract or a habit, how much work in progress is really billable, who holds the certifications, and what happens to margins when the owner stops quoting. Those answers move the value more than the choice of multiple.

Every valuation is prepared by a suitably qualified business valuer at Valuation Group. Guided by APES 225 Valuation Services. If you would rather talk it through first, call 0433 475 518.