The number that settles is the one a buyer pays. Our free business appraisal is built to find it: your accounts adjusted to show what the business earns for its owner, then weighed against what buyers are paying for similar New Zealand businesses right now.
It's confidential, it costs nothing, and you're under no obligation to sell.
One thing worth knowing up front. In New Zealand, brokers prepare appraisals. Formal valuations, the kind a bank or court relies on, come from chartered accountants. We cover both below, so you know which one you need.
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What a good business appraisal tells you
A single figure on its own isn't much use. A proper appraisal answers three questions. What would the business sell for today? What's holding the price back? And is now the right time, or would another 12 months of work put more in your pocket?
Most owners come to us for the first answer. The second and third are usually where the money is.
Which valuation do you need?
The right type depends on what you plan to do with the number. For most NZ owners it breaks down like this:
- You're thinking about selling in the next year or two. A broker's appraisal. It's free, it's based on what buyers are paying, and it comes with advice on getting the business sale-ready.
- You're curious but not ready to talk. Our business valuation calculator emails you an indicative range based on the figures you enter.
- A shareholder is leaving, you're separating, or your bank needs a figure. You need an independent business valuation from a chartered accountant with no stake in a sale. We can point you to the right person.
The line between a business appraisal and a formal valuation mostly comes down to who will rely on the result: you, or a third party such as a bank, Inland Revenue or the Family Court.
How businesses are priced in New Zealand
For most owner-operated businesses, price comes down to two things. What the business earns once the accounts are cleaned up, and the multiple a buyer will pay for those earnings.
Step one: find the real earnings
Your accounts were written for Inland Revenue. A buyer reads them differently. They want to know how much the business will pay its owner each year, so we adjust the figures to strip out anything that won't carry over to them.
NZ brokers usually call the result EBPITDA: earnings before proprietor's wages, interest, tax, depreciation and amortisation. The adjustments tend to look like this:
- Interest on your business loan comes out, because the buyer will arrange their own finance.
- A family member on the payroll who doesn't work in the business gets added back.
- Your vehicle, phone and the odd personal cost run through the books get added back.
- One-off costs, like a lawyer's bill from a dispute that's now settled, get added back.
- If the business leans on unpaid help, a fair wage for that role comes off.
Step two: apply a multiple
Adjusted earnings are then multiplied by a figure that reflects risk. Contracted recurring revenue, a long lease and a manager who runs the day-to-day all push the multiple up. An owner working 60-hour weeks with no one to step in pulls it down.
A worked example, for illustration only. A Hamilton plumbing business shows $150,000 net profit. Add back $12,000 of loan interest, $8,000 for the owner's ute and a $5,000 one-off legal bill, and adjusted earnings come to $175,000. At a multiple of 2.5, that points to a price of around $437,500, with stock often added at settlement.
The multiple is where owners most often guess wrong. Business valuation multiples in NZ vary widely by industry, so an IT support company and a café with identical earnings can sell years of profit apart.
Step three: test it against the market
Earnings and multiples give a starting figure. Comparable sales keep it honest.
Under the Real Estate Agents Act rules, a licensed broker's appraisal has to be in writing, reflect current market conditions and be supported by sales of similar businesses in similar locations. Where good comparables don't exist, the broker has to tell you that in writing too.
For asset-heavy businesses, such as a courier operator with a fleet of vans, we also look at what the plant and equipment would fetch. When earnings are thin, that can put a floor under the price.
What moves the price up or down
Two businesses with the same earnings rarely sell for the same price. Buyers pay up for:
- Recurring or contracted revenue, such as maintenance contracts, service rounds or managed IT agreements
- A lease with years left to run and rights of renewal
- Senior staff who run the day-to-day and plan to stay on
- Records that line up with your GST returns without needing a story
On the other side, buyers discount hard for owner dependence. If customers ring you and only you, a buyer is paying for something that walks out the door at settlement. A single client worth a third of revenue, a lease with 18 months left, or a profit dip nobody can explain will each drag the multiple down too.
Valuation advisory and pre-sale advice
The most useful appraisal is often the one done a year or two before you list. That's when there's still time to act on it.
Owners looking for valuation advisory services usually want two things: a realistic figure and a plan to lift it. Your appraisal covers both from a selling point of view. We'll tell you which changes are worth making and which aren't worth the effort. Common ones include getting a lease renewal signed before buyers start asking, handing key customer relationships to a manager, keeping personal costs out of the accounts for the next two financial years, and putting supplier arrangements in writing. Some take a phone call. Others need a full year of trading before they show up in the numbers.
If you're 6 to 12 months out, start with the practical steps for preparing your business for sale.
How our free business appraisal works
Your appraisal is prepared by Milan Kruger, a business broker licensed under the Real Estate Agents Act 2008.
- A confidential chat. Tell us about the business and what you're weighing up. A short call is usually enough to work out whether an appraisal is the right next step.
- Send the basics. Two to three years of financial statements, this year's figures if you have them, your lease or franchise agreement and a list of assets.
- We do the work. Adjust the accounts, apply the right method and test the result against comparable sales.
- You get a written appraisal. A price range, the reasoning behind it, and what would lift it.
- You decide. List, wait or do nothing. There's no obligation and no pressure.
To get started, book a free, confidential business appraisal and Milan will be in touch, or email him directly at milan@sellmybusinessnz.co.nz.
Confidential from the first call
Most owners worry about who finds out. Staff, customers, suppliers, the competitor down the road. Your enquiry, your figures and your appraisal stay between you and us, and nothing about your business is shared with anyone without your permission.
Business valuation questions
How much does a business valuation cost in NZ?
Our appraisal is free. A formal valuation from a chartered accountant is charged as a professional fee, which depends on the size of the business, its complexity and what the report is for. Ask for a quote before any work starts.
Is a free business appraisal reliable?
It has to be. A licensed broker's appraisal must be in writing, reflect current market conditions and be backed by comparable sales. Where it differs from a formal valuation is purpose. An appraisal helps you decide whether and how to sell, so banks, courts and Inland Revenue will usually want an independent report instead.
What multiple will my business sell for?
That depends on the industry, the size of the earnings and how much risk a buyer is taking on. Small owner-operated businesses generally sell on lower multiples than larger ones with management in place. Your appraisal shows where yours sits.
What is EBPITDA?
Earnings before proprietor's wages, interest, tax, depreciation and amortisation. It's the adjusted earnings figure most NZ brokers use to compare owner-operated businesses on a like-for-like basis.
Do I need to be ready to sell to get an appraisal?
No. Plenty of owners get one two or three years before they plan to sell, then use it to decide what to work on first.
Is stock included in the price?
Often it isn't. In many NZ business sales, stock is counted at settlement and added to the agreed price. Your appraisal will spell out what's included.
Can I use the appraisal for a relationship property or shareholder matter?
Usually not. Those situations call for an independent valuation that a lawyer, court or other party can rely on. We can point you to a chartered accountant who specialises in business valuation.
Will my staff find out?
Not from us. Everything you share is treated as confidential.
Find out what your business would sell for
A short, confidential conversation will usually tell you whether to get an appraisal now or in a year's time.