Market comparable valuation
A market comparable valuation benchmarks your business against what similar Australian businesses have actually sold for, expressed as revenue or EBITDA multiples and adjusted for size, control and liquidity.
It is the most intuitive method and the hardest to do well, because private transaction data in Australia is thin and deal terms are rarely disclosed. We use it as a cross-check in almost every engagement, and as a primary method only where the evidence genuinely supports it.
Step by step
How comparable evidence is applied
The value of this method is entirely in the quality of the comparables and the honesty of the adjustments made to them.
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01
Assemble the comparable set
Completed sales of businesses genuinely similar in sector, size, geography and business model — not merely in industry code. A small set of close comparables beats a large set of loose ones.
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02
Normalise the comparables
Reported multiples are adjusted for differences in how earnings were stated, what was included in the sale, and whether the price reflected an asset or share transaction.
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03
Adjust for the subject business
Size, growth, customer concentration, owner dependence and margin relative to the comparable set — each adjustment stated with the direction and reason.
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04
Apply control and marketability adjustments
A control premium or minority discount where the interest being valued is not the whole business, and a discount for lack of marketability where the shareholding cannot be readily sold.
Honest scope
When this method fits — and when it does not
Use it when
- Your sector has frequent, observable transactions
- You need a sanity check on an earnings-based conclusion
- A buyer or seller has quoted a market multiple you want tested
- The business is close in profile to recently sold businesses
Look elsewhere when
- The business is unusual and has no genuine comparables
- The only available data is asking prices rather than sale prices
- The purpose requires a rigorously defensible primary method
- Deal terms behind the comparables are unknown
Worked example: a suburban veterinary practice
Four comparable practice sales are identified in South East Queensland over 18 months, at 3.1×, 3.4×, 3.8× and 4.2× EBITDA. Two included the freehold and are adjusted to an operating-business-only basis before being used.
The subject practice is smaller than three of the four, has a single principal vet carrying most of the client relationships, but holds a lease with nine years of term. Net of those adjustments the evidence supports the lower half of the observed range.
3.2×–3.5× EBITDA, used to cross-check a capitalisation result of 3.3×
Illustrative only. Every engagement is scoped to the specific business, its records and the purpose of the valuation.
What we need
Inputs for this valuation
Comparable analysis needs enough about your business to match it honestly against the market — including the things that make it different.
Open the document checklist →- Revenue and EBITDA — three years Normalised, so the comparison is like for like
- Business model detail Revenue mix, recurring share, delivery model
- Customer concentration Top five customers as a share of revenue
- Ownership and interest being valued Whole business, or a specific parcel of shares
- Lease and location detail Term, options and site quality where relevant
- Any offers or approaches received Useful evidence, treated with appropriate caution
Subscription transaction databases, broker-reported sales, listed-company filings for larger comparables, and our own engagement history in the sector. All of it is imperfect: prices are sometimes reported before adjustments, and terms such as earn-outs and restraints are rarely disclosed. The report states the source and its limitations.
Because two businesses in the same industry can have very different risk profiles, and the multiple observed on a sale reflects that specific deal, its structure and its buyer. Used alone it invites the objection that the comparables were not really comparable. Used as a cross-check on an earnings method it is genuinely valuable.
EBITDA multiples, wherever earnings are meaningful, because revenue multiples ignore how profitably that revenue is earned. Revenue multiples are used where earnings are distorted or negative — early-stage software, or a rent roll priced on management income.
Barely. Asking prices reflect what a seller hopes for, and in the Australian SME market they routinely sit well above completed sale prices. We use them only as a boundary, never as a comparable.
The extra a buyer pays per share for the ability to direct strategy, dividends, remuneration and a future sale. Comparables drawn from whole-business sales carry control; applying them unadjusted to a minority parcel overstates that parcel’s value.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
Last reviewed
Test your number against what businesses actually sell for.
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