How we work out what your business is worth.

Last updated: 18 September 2026

Most tools that put a value on your business will not tell you where the number came from. We think that is the wrong way round, so this page is the whole method: the data, the sources, what the number leaves out, and how well it has actually tested.

The number has two halves

Every business sale price is the same shape: the earnings, multiplied by a multiple. A business earning $400,000 that sells on a multiple of 3 is worth $1.2 million. The same business on 4.5 is worth $1.8 million. Same earnings, $600,000 difference.

So we work out the two halves separately, from different sources, because they are different problems.

Half one: your earnings

We use PEBITDA — the profit the business makes with the owner's own wage added back in. Buyers of owner-run businesses price on this rather than EBITDA, because in a business you still work in, your wage and the profit are the same pool of money.

To estimate it from your turnover we use the ATO Small Business Benchmarks, which the Australian Taxation Office compiles from over two million small business tax returns and publishes by industry and by turnover band. We use the 2023-24 edition.

Based on Australian Taxation Office data, Small Business Benchmarks (data.gov.au), used under CC BY 2.5 AU.

We match your business to one of 49 benchmarked industries out of 55 we recognise, take that industry's published expense range for a business your size, and work back to an earnings range.

Half two: the multiple

Multiples come from what businesses in your industry actually sell for. There is no free, public, authoritative Australian dataset of completed small business sales. The genuinely authoritative one, the AIBB's BizStats, is available only to licensed business brokers.

So we use published Australian broker ranges and name them:

• Primary source: New Chapter Business Sales. Matches TMP's locked table EXACTLY on every row that can be independently cross-checked, on the same earnings basis and using the same uncommon PEBITDA terminology: cleaning 1.3-2.0, gyms 1.7-2.5 (owner-operated), childcare 1.8-2.9 (owner-operated). Three exact matches on three checkable rows is conclusive shared lineage.
• Secondary source: Iain Darroch - AU small business valuation multiples, used where the primary source does not cover an industry, and flagged in your report when it is.

Where our sources disagree, we tell you

PARTIAL, and the disagreement matters. Puts trades at 2.0-3.5x SDE where TMP says 1.5-2.5x PEBITDA, roughly 40% apart on near-equivalent earnings bases. Two credible AU sources genuinely disagree. Show the dispersion, do not hide it.

That is not a flaw we are hiding. It is the single most useful thing to understand about business valuation: credible people disagree by a wide margin, which is exactly why you get a range and not a number.

Why your score moves the number

Two businesses in the same industry with identical profit do not sell for the same price. The one that runs without its owner sells higher, because the buyer is purchasing a business rather than a job.

So your 5x5 score sets where you sit inside your industry's range: a low score sits near the floor, a high score near the ceiling. Business size adjusts it slightly after that.

If you clear a genuine manager-run standard — measured on service delivery, documented process, owner dependency and how your team is managed — you move onto a higher range entirely, where your industry has one published. That step is the whole point of the exercise, and we hold it to a deliberately high bar: an undeserved step up produces a number you cannot actually get.

What the number includes, and what it does not

Included:

• Goodwill
• The customer base, contracts and recurring revenue
• Systems, processes and documented SOPs
• Plant and equipment ordinarily required to operate at the assessed earnings level

Excluded:

• Stock on hand - AU small business sales are commonly quoted plus SAV (stock at valuation)
• Debtors and creditors - normally retained by the seller
• Cash at bank
• Real property - land and buildings are valued separately, never inside these multiples
• Motor vehicles beyond those required for operations
• Any asset value in excess of what the earnings support, which is why asset-heavy businesses can transact above the range

This matters more than it sounds. Australian small businesses are commonly sold "plus SAV", meaning stock is paid for on top. If you own your premises, that is a separate asset and a separate negotiation.

How accurate is it, really

We test the model against real Australian businesses currently listed for sale, where the seller has published both their earnings and their asking price. The figures below are generated from that test run, not written by hand.

Two things to read carefully. Asking price is not sale price — Australian businesses routinely ask more than they achieve, so a model reading below asking prices is behaving correctly. And this is a small sample of 8 businesses, which we would rather publish than claim a precision we have not earned.

Every industry, and where its numbers come from

"Primary source" and "Secondary source" are the broker ranges named above. "Conservative default" means no published range covers that industry, so we use a deliberately low placeholder and say so in your report.

What would make this better

Broker-verified multiples. We are looking for an AIBB-member business broker to review these ranges each quarter against real completed sales. If that is you, we would like to hear from you.

Start your Free Discovery →

← Back to home