Understanding Business Valuation Multiples in Australia

This guide explains the key factors that impact business valuation in Australia, with a particular focus on businesses in the $1M-$1.5M EBITDA range.

Quick Reference: Most Australian businesses with $1M-$1.5M EBITDA are valued at 2.5x-5.0x EBITDA, depending on industry, growth rate, customer concentration, and management dependency.

Key Value Drivers

1. Consistent Financial Performance

Businesses showing steady growth over 3-5 years will command higher multiples than those with erratic performance. Clear financial records, formal accounting practices, and strong gross margins are essential.

2. Customer Diversification

Businesses with a broad customer base are valued more highly than those where a small number of customers represent a large percentage of revenue.

3. Management Dependency

Businesses with strong management teams that don't rely solely on the owner typically receive higher valuations. A well-documented operations manual and clear processes can significantly increase business value.

4. Growth Potential

Businesses with clear growth opportunities—such as expansion potential, untapped markets, or new product/service lines—command higher multiples.

5. Recurring Revenue

Businesses with predictable, recurring revenue streams (subscriptions, contracts, retainers) are valued more highly than those relying on one-time sales.

Australian Industry Valuation Multiples

Industry Typical EBITDA Multiple Range Key Factors Affecting Valuation
Manufacturing 2.6-3.8x Equipment age, efficiency, supplier relationships
Professional Services 2.0-6.0x Client retention, team expertise, recurring contracts
Wholesale/Distribution 2.8-4.0x Supplier exclusivity, inventory management, logistics efficiency
Healthcare 4.0-8.0x Regulatory compliance, patient/client base, specialized services
Trades/Construction 1.0-2.5x Project pipeline, equipment ownership, employee expertise

How Short Inc. Approaches Valuation

At Short Inc., we take a transparent approach to business valuation based on Australian market standards and our extensive experience in business acquisitions.

  1. Comprehensive Assessment: We evaluate your business based on financial performance, operational strengths, and growth potential.
  2. Fair Market Value: We offer valuation ranges aligned with Australian industry standards.
  3. Flexible Deal Structures: We can structure deals to maximize value while addressing your specific goals and transition preferences.

For a personalized valuation of your business, we invite you to use our online valuation tool or contact us directly for a confidential discussion.

This guide is provided for informational purposes only and does not constitute financial advice. Individual business valuations may vary significantly based on specific circumstances.

← Return to Short Inc. Website