What does each section of the report cover?
The headings below appear in every report. What changes from one industrial business to the next is where the analysis goes deep: a jobbing machine shop needs more on plant and the owner's role in quoting, a distributor more on stock and supplier terms, a transport operator more on fleet age and finance.
| Section | What it covers | What it looks like in an industrial business |
|---|---|---|
| Front page | Purpose, intended users, interest valued, valuation date, basis of value, the conclusion and a boxed restriction on use | States plainly that the report is for a commercial purpose and is not an expert witness report for court |
| Summary | The value range, the adopted value and the few factors that moved it most | Names the real drivers, such as the share of revenue from one customer or a machine replacement program, rather than generic risk |
| Scope and information | What we received, who we spoke to, whether a site visit was needed, what we did not verify and the signed representation letter | Lists the equipment register, work in progress schedule, revenue by customer and finance agreements we relied on |
| The business | History, ownership, operations, premises, workforce, customers, suppliers and certifications | Covers shift pattern, capacity utilisation, machine count and age, quality certifications and supplier approvals held with major customers |
| Industry setting | The demand drivers, input costs and labour market that bear on this business | For a mining supplier, the equipment and commodity cycle; for a food or packaging plant, retailer terms and contract renewal dates |
| Financial performance | Three years of revenue, gross margin, overheads, EBITDA and EBIT, with the balance sheet | Separates one-off project revenue from repeat work, and shows margin by product line where the records allow it |
| Normalisation | Adjustments that restate profit as an arm's length owner would see it | Working owners costed at the market rate for the roles they fill, related-party rent set to market, asset sale profits and one-off costs removed |
| Maintainable earnings and capex | The earnings we expect the business to sustain, and the capital spending needed to sustain them | Tests book depreciation against the real replacement cycle of the plant, because old machines flatter EBITDA |
| Method | Which approach fits and why the others were set aside | Capitalised earnings for a steady operation, discounted cash flow where a contract or expansion changes the outlook, an asset approach where earnings do not support the assets |
| Valuation calculation | The multiple or discount rate selected and the risk factors behind it | Each factor is tied to evidence in the file, not to a rule of thumb |
| Enterprise value to equity value | Debt, equipment finance, surplus cash, working capital against a normal level, employee provisions and surplus assets | Often the section owners find most surprising: chattel mortgages and long service leave come off, surplus cash goes on |
| Cross-checks | Tests of the conclusion against a second method or the tangible asset base | Compares enterprise value with the plant and normal working capital to show how much goodwill the earnings actually support |
| Assumptions and declarations | Assumptions, limitations, independence, the restriction on use and the standard the work is held to | Carries the line: Guided by APES 225 Valuation Services |
| Appendices | Financial schedules, normalisation detail and sources | Year by year working, so your accountant can trace every adjustment back to the accounts |
For how we choose a method and what we analyse in an industrial business, see how we value.
What does the front page tell the reader?
Anyone who picks up the report, whether a buyer, a bank or the other shareholder, should be able to see from the first page what was valued, at what date, for what purpose and for whom. The interest valued is stated precisely: 100% of the shares in a company is a different question from a 30% parcel, and both differ from the business assets bought out of the company.
The front page also carries a boxed restriction on use. A report prepared for commercial purposes is not a court expert report. If the report is later needed in court or before a tribunal, that is a separate engagement with its own scope and fee, and the report says so before anyone relies on it.
Every report is signed by a suitably qualified business valuer at Valuation Group and carries this line: Guided by APES 225 Valuation Services. APES 225 is the standard Australia's accounting bodies set for valuation work. We are an independent valuation practice, not an accounting firm, and we hold every report we sign to it.
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Fictional excerpt: the business and its earnings
| Item | Fictional sample |
|---|---|
| Client | The two shareholder directors of Example Precision Engineering Pty Ltd |
| Purpose | To inform a proposed sale of the company within two years |
| Interest valued | 100% of the issued shares |
| Basis of value | Market value |
| Valuation date | 30 June 2026 |
| Method | Capitalisation of maintainable earnings, cross-checked against tangible assets |
Business overview (excerpt)
The company machines and fabricates wear parts, hydraulic cylinder components and gearbox housings for mining equipment manufacturers and rebuild workshops, and makes stainless parts for food-processing equipment. Its plant is nine CNC machines, made up of five lathes and four machining centres (one of them five-axis), plus saws, a press brake, welding bays and two forklifts. It works from a leased 2,400 square metre factory on a day shift and a partial afternoon shift. Spindle utilisation averaged 68% over the year, so volume can grow without buying another machine. The quality management system is certified to ISO 9001, which two of the mining customers require of approved suppliers.
The company employs 34 people including the two directors, and four of its nine qualified machinists are over 55. The managing director prepares about 80% of quotes and holds the relationship with the largest customer, a mining equipment manufacturer that took 38% of FY26 revenue under a supply agreement running to June 2027 with no minimum volumes. The top three customers took 61%. The factory is leased from a trust related to the directors, with four years to run plus a five-year option.
Normalised earnings (excerpt)
| $000 | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue | 5,620 | 6,100 | 6,480 |
| Reported EBITDA | 780 | 905 | 1,010 |
| Working directors costed at the market rate for their roles | (90) | (92) | (95) |
| Related-party rent adjusted to market | (40) | (41) | (42) |
| One-off legal costs of a debt recovery added back | 0 | 0 | 38 |
| Profit on sale of an old lathe removed | 0 | 0 | (25) |
| Normalised EBITDA | 650 | 772 | 886 |
| Normalised EBITDA margin | 11.6% | 12.7% | 13.7% |
The directors drew salaries below what the business would pay a general manager and a chief estimator to do the same work, and the related trust charged less than market rent. Both flatter reported profit, so both are corrected before any value is struck.
Fictional excerpt: from maintainable earnings to enterprise value
Maintainable earnings (excerpt)
FY26 included a catch-up order from the largest customer after it brought a fleet rebuild program forward. The customer's own forecast shows normal volumes in FY27, so we removed the estimated $36,000 contribution from that order and adopted maintainable EBITDA of $850,000.
Depreciation in the accounts was $205,000, which understates what it really costs to keep the plant running. The nine CNC machines have an average replacement cost of about $400,000 and a working life of about 15 years, and each should fetch about $30,000 when it is sold at the end of that life. Net of those proceeds, replacing them costs about $3,330,000 over a cycle, or $222,000 a year. Replacing the saws, press brake, welding equipment and forklifts as they wear out adds about $18,000 a year, so sustaining capital expenditure is about $240,000 a year, and two of the older machining centres are due for replacement within two years. We therefore deducted $240,000, not the book depreciation, to reach maintainable EBIT of $610,000. Why EBIT often tells you more than EBITDA in a plant-heavy business.
Selecting the multiple (excerpt)
The multiple below was selected for this fictional company only and is not market evidence for any industry. Factors that held it down: 38% of revenue from one customer on an agreement with no minimum volumes, the managing director's role as chief estimator, the age of the plant and exposure to the mining equipment cycle. Factors that supported it: ISO 9001 certification and supplier approvals that a new competitor would take time to win, long staff tenure, spare capacity at 68% utilisation, and a food-processing line that softens the mining cycle.
| $000 | Low | High |
|---|---|---|
| Maintainable EBIT | 610 | 610 |
| Capitalisation multiple (fictional) | 4.0 | 4.5 |
| Enterprise value | 2,440 | 2,745 |
We adopted an enterprise value of $2,590,000, the midpoint of the range rounded to the nearest $10,000.
Fictional excerpt: from enterprise value to the value of the shares
| $000 | Low | Adopted | High |
|---|---|---|---|
| Enterprise value | 2,440 | 2,590 | 2,745 |
| Equipment finance (chattel mortgages) | (386) | (386) | (386) |
| Surplus cash: $412,000 at bank less $150,000 needed to trade | 262 | 262 | 262 |
| Working capital above the normal level | 80 | 80 | 80 |
| Long service leave provision | (96) | (96) | (96) |
| Equity value, 100% of the shares | 2,300 | 2,450 | 2,605 |
Debtors, stock and work in progress, less creditors, averaged about 16% of revenue over the year, a normal level of about $1,040,000. At the valuation date working capital stood at $1,120,000, including $310,000 of work in progress across 14 open jobs, which we tested against job costing on the two fixed-price jobs. The $80,000 above the normal level belongs to the shareholders, so it is added. How working capital moves the price.
Cross-check against tangible assets (excerpt)
A plant and machinery valuation prepared for the company's financier in March 2026 put the plant at $1,250,000, market value for continued use. Adding normal working capital of about $1,040,000 gives operating tangible assets of about $2,290,000, so the adopted enterprise value implies goodwill and other intangibles of about $300,000, around 12% of enterprise value. That thin layer of goodwill fits the customer concentration and owner dependency noted above, and it shows why the machinery does not add its own value on top of the earnings it produces. How plant and equipment affects value.
Valuation conclusion (excerpt)
On the basis and assumptions set out in this report, we assess the market value of 100% of the issued shares in Example Precision Engineering Pty Ltd at 30 June 2026 at $2,450,000, within a range of $2,300,000 to $2,605,000. This conclusion relies on the representation letter signed by both directors before this report was signed.
Two changes would do most to lift it before a sale: a renewed supply agreement with minimum volumes, and a second estimator able to price the mining work without the managing director. Those are the two risks a buyer will price hardest. How customer concentration affects value.
What a business valuation report does not do
- It is not an expert witness report. A report prepared for commercial purposes is not a court expert report. Court or tribunal work is a separate engagement with its own fee.
- It is not a plant and machinery valuation. Where one exists we use it as an input, as the fictional excerpt does: the financier's $1,250,000 plant valuation is a cross-check on the earnings, not an extra $1,250,000 added on top of them.
- It is not an audit. We test the information for consistency, and the client confirms it in a signed representation letter before the final report is signed.
- It is not a promise of price. A buyer's offer reflects its own plans, funding and deal terms, such as an earn-out or vendor finance.
What do we need to produce a report like this?
Three years of financial statements and the current year to date, an equipment register showing age and any finance, revenue by customer, the work in progress schedule, the premises lease, an employee list with roles and length of service, and any major customer or supply contracts. Documents come only through the private upload link on your matter, never by email. The valuation readiness check shows what you already have.
Fees are fixed and set by annual turnover. Turnover under $2 million: From $1,495 + GST, delivered in 2 business days. Turnover $2 million to $10 million: From $2,495 + GST, delivered in 3 business days. Delivery time starts once payment and all required information have been received. Turnover over $10 million or a complex structure: From $3,495 + GST, with timing agreed before we start. We confirm the fee in writing before we start. No hourly billing. The fictional company above, with turnover of about $6.5 million, would sit in the established band. See pricing.
Questions
Is the excerpt taken from a real client's report?
No. Example Precision Engineering Pty Ltd is invented, and so are its people, customers and figures, including the multiple. We never publish client reports or client figures. A report is confidential to the client and the intended users named in it.
Will my report use the same method?
Not necessarily. Capitalising maintainable earnings suits a steady business like the fictional example. A business with a major contract starting or ending, or an expansion under way, may need a discounted cash flow, and one whose earnings do not support its assets may need an asset approach. The report explains which method was used and why. See how we value.
Who signs the report?
A suitably qualified business valuer at Valuation Group signs every report. The report includes a declaration that the valuer is independent of the parties and has no interest in the outcome.
Does the report value my machinery separately?
No. We value the business, and the plant is one of the assets that produce its earnings. A formal plant and machinery valuation is a separate discipline. Where one exists we use it as an input and a cross-check, as the fictional excerpt shows.
Can the report be used in court or in a family law matter?
A report prepared for commercial purposes is not a court expert report. If you need expert evidence, that is a separate engagement with its own scope and fee. Family law matters are prepared through our dedicated family law practice, Family Law Valuations: a Settlement Valuation is $2,495 + GST and an Expert Report is $4,495 + GST. See family law business valuation.
How much does a report cost and how long does it take?
Smaller industrial business, turnover under $2 million: From $1,495 + GST, delivered in 2 business days. Established business, turnover $2 million to $10 million: From $2,495 + GST, delivered in 3 business days. Delivery time starts once payment and all required information have been received. Larger or complex business: From $3,495 + GST, with timing agreed before we start. Disputes and expert matters are quoted individually. We confirm the fee in writing before we start. No hourly billing.
Do you need to visit the factory?
Usually not. Most valuations are completed from documents and conversations. If the operation or the equipment needs to be seen, we say so when we scope the work and agree any visit and its cost before it happens.