Free tool

Free Business Valuation Calculator for Wollongong Owners

Type in your own numbers to see a value range from the four methods a certified valuer uses, with each calculation shown on screen.

Owners in Wollongong, Shellharbour, Kiama and across the Illawarra can use this free tool to get a value range from four methods: capitalised earnings, discounted cash flow, a market multiple and adjusted net assets. You enter a low and a high rate or multiple, so the output is a range and not one number. It is for learning how valuation works, and it is not a valuation.

Calculate the value of your business

Choose a method and fill in your figures

Choose one of the methods and key in your figures; the range updates as you type. Your entries stay in the browser, and no email address is needed to see the result.

Your figures

The values already in the form are samples that show how it works. Overwrite them with your own, and give both a low and a high rate so that you get a range and not a single point.

Step 1. Normalise your earnings

Your reported profit shows the business the way you operate it, which is not what a buyer would take over. Normalising restates it from the buyer's point of view. Type add-backs as positive numbers and deductions as negative numbers.

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

Step 2. Capitalisation rate

%
%
Equity bridge, optional

Applying a capitalisation rate or multiple produces enterprise value, which is what the operations are worth to lenders and owners combined. Take off the debt, add any surplus assets, and the result is close to what the owner would keep.

A$
A$

Enterprise value range

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

Not included in this result

  • No check on whether the earnings you entered will continue
  • Goodwill tied to you personally that would go when you do
  • Comparable sales matched to your industry, size and location
  • Allowances for tax, working capital, contingent liabilities and the terms of your lease
  • Discounts for a minority stake or for shares that are difficult to sell
Everything runs inside your browser; nothing you type is sent or saved. Speak to a certified valuer

This is not a valuation

The calculator only does arithmetic on the numbers you enter. It has not looked at your financial statements, cannot tell whether your earnings will hold, does not choose comparable sales, and makes no allowance for a minority holding or for an interest that is hard to sell. It is general education, not financial, legal or valuation advice, and should not be relied on for a sale, a court matter or a tax position.

When someone else has to rely on the figure, 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 each of the four methods does

Capitalisation of earnings

Takes one year of maintainable earnings and divides it by a capitalisation rate. It suits an established business with steady results, such as a Crown Street accounting practice or a Fairy Meadow trade supplier, where one year is a fair guide to those ahead.

Income approach

Discounted cash flow

Forecasts the cash flow for every year to come and discounts each one back to today. It suits a business whose path is changing, such as a builder expanding into the western Illawarra or a Port Kembla supplier whose largest contract ends in year three.

Income approach

Market multiple

Applies a multiple, backed by comparable sales, to maintainable earnings. The result depends on the transactions behind the multiple, which a calculator cannot provide, whether the business is a Kiama cafe or a Dapto retailer.

Market approach

Adjusted net assets

Restates each asset at market value and deducts the liabilities. It leads for a plant-heavy business such as an engineering workshop at Unanderra, and it puts a floor under the other methods.

Asset approach
Limits

Where the sums stop and judgement starts

The calculation takes a few seconds; choosing the inputs is where the effort goes. Will the earnings you typed in carry on? Which recent sales in Wollongong, Shellharbour or Kiama really look like your business? How much of the goodwill depends on you? How long does your lease run if you trade from premises covered by the Retail Leases Act 1994 (NSW)? How much of your revenue depends on a few customers? A form cannot answer any of those.

The capitalisation rate is the clearest example. In a real engagement it is built up from a risk-free rate drawn from long-dated Australian Government bond yields, an equity risk premium, a size premium, an industry premium and a loading for your own risks. In this tool you just type one in. If the rate is out by a few points the answer moves a long way, however exact the figure on screen looks.

It also explains why a broker's rule of thumb, such as a flat multiple of turnover or of gross fees, works only as a sense-check. It rates a high-margin business and a struggling one the same, although margin and risk are what set apart two businesses of equal size in one trade.

Questions

Common questions about this calculator

Start from maintainable earnings. Restate reported profit with a market wage instead of your drawings, rent at arm's length and no one-off items. Those earnings can then be valued three ways: divide by a capitalisation rate, multiply by a multiple drawn from comparable sales, or forecast the cash flows and discount them to a present value. The outcome is enterprise value; subtract interest-bearing debt and add surplus assets to arrive at the equity value the owner would really receive.
No. It is a learning aid that does arithmetic on your entries. It has not examined your accounts, challenged your assumptions, chosen comparable sales or applied control and marketability discounts. A valuation is a written opinion from a qualified valuer who will stand behind it under challenge. Our lightest report, the Indicative report, is for internal decision-making and is not written for third party reliance.
A single figure implies more precision than any method can truthfully offer. You supply a low and a high rate or multiple, and the calculator values the business at both ends. Valuers follow the same practice: arrive at a range, reduce it to one point only if the purpose requires it, and state in writing where the conclusion falls and the reason.
Most owners focus on equity value. Enterprise value is the worth of the trading operations to lenders and shareholders combined, and it is what a capitalisation rate or multiple yields. Equity value belongs to the owners: enterprise value minus interest-bearing debt, plus surplus or non-operating assets. The calculator carries out that bridge as a separate step, so both numbers appear together.
This is the input a calculator cannot provide, and it is where judgement does the work. A capitalisation rate combines a risk-free rate, an equity risk premium, a size premium, an industry premium and an allowance for risks peculiar to your business, such as reliance on a few customers or on you personally. A multiple ought to come from actual transactions screened for industry, size, growth and location, and not from a figure heard in passing.
Your accounts report the profit of the business as you choose to run it, and a new owner would inherit something different. Normalising replaces your drawings with a market wage, puts related-party rent at market, takes out one-off items and removes income from assets the business does not require. Valuers disagree over normalisation more than over anything else, which is why the calculator shows it openly.
No. A property settlement before the Federal Circuit and Family Court of Australia, a small business CGT concession claim with the ATO, a landholder duty question from Revenue NSW, or a shareholder dispute in the Supreme Court of New South Wales each calls for a written opinion from a certified valuer who has examined the records and will defend the result. Use the calculator to see the likely shape of the answer ahead of that conversation, and not as a replacement for it.
No. The calculator is plain JavaScript running inside your own browser. What you type is never transmitted, logged or saved, and no email address or phone number is needed to see the result.
It is only as accurate as the assumptions you feed it, so it returns a range and shows its working. It cannot assess the quality of your earnings, how concentrated your customers are, how secure your lease is, or whether the goodwill would outlast you. Use it to prepare for a conversation with your accountant or with us, and never as the basis for a price.
Keep reading

Read next

Methodology The three valuation approaches By sector Wollongong valuations by industry 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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