What we value
Privately owned businesses held directly or through companies, trusts and partnerships, whole or in part, across most industries. What changes from one to the next is the questions that matter, and the report is built around those.
In a family law matter the question is rarely "what is the business worth" alone. It is "what is this person's interest worth", which depends on how the business is held, what rights the interest carries and whether the holder controls it. The first task in every engagement is to identify precisely what is being valued: the entity, the class of interest, the percentage held and the date. The engagement letter records that, and the report explains how the structure affects the value.
The twelve types below cover most matters. What tends to matter for each, in a family law context, is different.
A private company is valued as a whole, and then the shares actually held are valued, which may differ where the holding is less than the whole or the constitution and any shareholder agreement restrict transfer or control. Loans between the company and its shareholders, retained profits and franking credits are identified and treated consistently. The report explains the movement from enterprise value to equity value and then to the value of the shareholding.
The business and its owner are the same legal person, so the question is what, if anything, could be sold to someone else. Earnings are adjusted for the owner's own labour at a commercial rate, and the analysis of goodwill focuses on how far customers, referrers and contracts would follow a new owner. Many sole-trader businesses hold most of their value in the owner's hands rather than in a transferable asset.
A partner's interest is valued with reference to the partnership agreement: the share of profit, the share of capital and the terms on which a partner can leave or be bought out. Where the agreement fixes an exit price, the report considers whether that price reflects market value or something else. Partner drawings, salaries and capital accounts are reconciled before the earnings are assessed.
Where a business is run through a discretionary or unit trust, the interest being valued has to be identified carefully, because a beneficiary of a discretionary trust may have no fixed entitlement at all. The valuer reads the deed, identifies the trustee, the appointor and the beneficiaries, and considers control as well as entitlement. How the trust is treated in the property pool is a legal question; the report provides the value and explains the structure so that question can be addressed.
Accounting, legal, engineering, architectural and similar practices earn from the skills and relationships of their principals, so the analysis of goodwill and owner dependence is central. Fee base, client concentration, staff leverage and the terms on which principals can leave are examined. The valuer distinguishes the earnings the practice would produce for a purchaser from the earnings that reflect the principal's own work.
Registrations, provider numbers and referral relationships typically attach to the practitioner rather than to the practice, which affects what a purchaser could acquire. The valuer looks at the billing model, practitioner contracts, patient and referrer concentration, premises and the owner's clinical hours. Where the practitioner-owner generates most of the fees, the value of the practice as a business may be modest even where the income is substantial.
Registration, participant plans and workforce arrangements determine how durable the revenue is. The valuer examines participant numbers and concentration, plan funding and renewal, the workforce model, compliance history and how much of the operation could run without the owner. Rapid growth is common in this sector and is tested rather than assumed to continue.
Value depends on traffic sources, platform dependence, margins after advertising and fulfilment costs, stock, and whether the brand, domain and customer data can be transferred cleanly. The valuer looks for concentration on a single marketplace or advertising channel and for how much of the operation is systemised rather than run personally by the owner. Growth is assessed against the cost of achieving it.
Work in progress, retentions, licensing and the owner's role, on the tools or in winning work, are the usual questions. The valuer considers whether licences and accreditations are held by the business or by the owner personally, how contracts are won and how dependent the business is on a few builders or customers. Plant and vehicles are identified and treated separately from goodwill.
Cleaning, consulting, marketing, IT, hospitality, transport and other service businesses are valued on the earnings they can maintain after paying for the owner's own labour at a commercial rate. Customer contracts, staff, systems and the reasons customers stay are examined to assess how much of the business would transfer to a purchaser. Seasonality and recent changes in trading are considered when identifying maintainable earnings.
A minority interest does not carry control of the company, its distributions or its sale, and its value depends on the rights attached to it under the constitution, any shareholder agreement and the conduct of the majority. The valuer considers the holder's actual position rather than a simple share of the whole. Where the shareholding is in a family company controlled by one party, the report explains how that affects the analysis.
Many businesses are run through a group: a trading company, a trust that owns the premises, a service entity that employs the staff, and loans between them. The valuer maps the group, identifies the interest held in each entity, reconciles the transactions between them and values the interests consistently so that nothing is counted twice or missed. The report presents the structure clearly so advisers can see how each entity contributes to the whole.
If the business or interest is not listed, it can very likely still be valued. Tell us about it and we will confirm at the scope stage.
Real estate, superannuation and other specialist assets may require separately appointed specialists. The legal treatment of an interest in the property pool is a question for your legal adviser.
A family-law business valuation may consider the following. Not every factor applies to every engagement; the report addresses the ones that are relevant to the business and the interest being valued, and explains why.
The starting point is what the business has actually earned over recent years. The question is what it can be expected to earn in a normal year. One exceptional year, up or down, is not the answer.
Owners often pay themselves more or less than the market rate for the work they do. Earnings are adjusted to reflect what a purchaser would need to pay someone to do that work.
Vehicles, travel, phones, family wages and other private costs paid by the business are identified and added back where they are not costs of earning the income.
Insurance recoveries, legal costs, asset sales, grants and other items that will not recur are removed so that the earnings reflect ordinary trading.
Borrowings reduce the value of the equity; cash and assets the business does not need in order to trade are added to it. The report separates enterprise value from equity value.
A business needs a certain level of stock, debtors and cash to operate. Whether it holds more or less than that affects the value.
The valuer analyses the sources of the business's goodwill and how far they depend on the owner personally, as a tool for assessing what value would transfer to a purchaser. See the note on goodwill below.
A business that stops when the owner stops is worth less than one that runs without them. Hours, relationships, licences and know-how are examined.
Rent, wages, management fees and loans between the business and related people or entities are tested against market terms and adjusted where they are not.
An interest that lacks control of the business is analysed on the rights it actually carries, not as a simple fraction of the whole.
The structure through which the business is held affects what is being valued and how earnings flow to the owner. The report values the interest as it exists; the tax consequences of any settlement are for the parties' advisers.
In some matters the instructions ask what the business is worth to the person who holds it rather than what a purchaser would pay. Where that is relevant, the report explains the difference and states the basis adopted.
The valuation is at a date. Where events after that date are relevant, the report states how they were treated and why, so the reader can see what was taken into account.
Goodwill is the value of a business above its identifiable net assets: the reason customers return, referrers refer and the business earns more than its plant and stock alone would justify. The High Court described goodwill as a single asset of the business in Federal Commissioner of Taxation v Murry (1998), and the Australian Taxation Office adopts that approach in Taxation Ruling TR 1999/16. It is one asset, not two.
What the valuer does is analyse the sources of that goodwill and how far each depends on the owner personally. A practice whose patients follow the practitioner, a trade business whose builders deal only with the owner, or a consultancy built on one person's reputation has goodwill that would largely not survive a change of owner. A business with systems, staff, contracts and a brand that customers deal with has goodwill that would. That analysis is a tool for assessing what value would transfer to a purchaser.
It is often the most important part of a family law valuation, because it decides whether the business is a saleable asset or mainly an income stream for the person who runs it. The report sets out the analysis and the evidence for it, so the conclusion can be tested by the other party, their advisers and, where required, the Court.
Your questions
Yes. A business that is trading at a loss, or breaking even after the owner is paid a commercial wage, still has a value, which may be no more than its net assets or may reflect a reasonable expectation that earnings will recover. The report explains which, and why. A low value is a finding, not a failure of the valuation.
Only where the premises are owned by the entity being valued and the instructions include them. Where the premises are held in a separate entity, or personally, they are usually valued separately by a property valuer and the business is valued as if it pays market rent. The report is explicit about what is and is not included.
No. We value businesses and ownership interests in them. Real property, superannuation interests, vehicles and personal assets are valued by others or agreed between the parties. Where the business owns such an asset, the report identifies it and explains how it was treated.
Yes, on instruction. Some matters need a value at separation and another at a later date, and the report can address both and explain what changed between them. Which dates are relevant to your matter is a question for your lawyer.
It does not change how the business is valued at a given date. How the history of the business, and each party's contributions to it, are taken into account in the settlement is a legal question for your lawyer. Where the instructions ask for a value at the start of the relationship as well as now, the report can address both.
Usually not for a Settlement Valuation, which is prepared from the documents and, where needed, a call with the owner or an adviser. Some businesses are better understood in person, particularly where plant, stock or premises matter to the value, and we will say so during scope review. Meetings are available by appointment at our Double Bay office in Sydney.
Complete the confidential enquiry and choose "Not sure" for the service. Tell us whether the matter is before the Court, whether a single expert has been agreed or ordered, and what the valuation will be used for. We complete an initial conflict and scope assessment and tell you which service fits, or that a quotation is needed, before anything begins. Submission of the form does not create an engagement.
For negotiation and mediation the starting point is a Settlement Valuation at $2,495 + GST. Where an expert report for court is required, the Family Law Expert Valuation is $4,495 + GST, subject to conflict checking and scope review. Or call 0433 475 518 or request a call back. Phone hours are 8am to 6pm, Monday to Friday (Sydney time).
The Settlement Valuation is prepared for negotiation and mediation purposes. It is not prepared for filing or reliance as expert evidence in court.