How to value a small business in Australia
The three valuation methods every buyer should run before making an offer — plus the AU-specific multiples and red flags that change the number.
Method 1: Multiple of EBITDA / SDE
Most small AU businesses are priced as a multiple of normalised earnings (Seller's Discretionary Earnings for sub-$1M, EBITDA above that).
Typical multiples: cafés 1.5–2.5×, restaurants 1.5–3×, retail 2–3×, established services 2.5–4×, franchises 2–3.5×.
Multiples rise with: recurring revenue, low owner-dependence, long lease, multiple staff, growing trend.
Multiples fall with: one-customer concentration, owner is the brand, short lease, declining revenue.
Method 2: Discounted Cashflow (DCF)
Forecast 5 years of free cashflow, discount back to today at your required return (typically 15–25% for small business).
Use this as a sanity check on the multiple — if DCF says $400k and the asking price is $900k, walk away or renegotiate.
Method 3: Asset-based / liquidation
Sum of tangible assets (fitout, equipment, stock at cost) minus liabilities. This is the floor — what's left if the business closes tomorrow.
Useful for asset-heavy businesses or distressed sales. Pure goodwill businesses (consulting, services) have very little asset value.
Red flags that knock value down
Single customer >25% of revenue.
Owner works >50 hrs/week and is the relationship-holder.
Lease has <3 years remaining or no option to renew.
Revenue trending down for 2+ years.
Add-backs that look manufactured ("my partner's salary, my car, my holiday").
Use the calculator
Plug the seller's numbers into our Analyse tool — it runs EBITDA, ROI, payback, DSCR and stress-tests interest, sales drops and rent rises in one screen.
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