Practical guide
Business Valuation in New Zealand: What Is My Business Worth?
When a business owner asks “what is my business worth?”, the answer is rarely one exact number. A useful business valuation is a reasoned range built from earnings, risk, assets, market evidence and the quality of the operation.
The starting point: maintainable earnings
For many owner-operated businesses, the first measure is Seller's Discretionary Earnings (SDE). SDE attempts to show the total financial benefit available to one working owner. It can include reported profit, owner salary, depreciation, interest and genuine one-off expenses, but every adjustment must be explainable and supported.
The multiple is a judgement, not a lookup price
The multiple reflects transferability and risk. A business with clean accounts, recurring customers, documented systems, a secure lease and low owner dependence may justify a stronger multiple than a similar business where the owner is the only salesperson, operator and relationship holder.
What a buyer will test
- Can the reported earnings be verified against tax returns and bank records?
- Will customers, staff, suppliers and key contracts remain after settlement?
- How much working capital and replacement equipment will be needed?
- Is the asking price supported by comparable evidence?
OpenBiz's free AI valuation tool is a useful first estimate, not a formal valuation. Use the result to identify questions, then involve a chartered accountant or licensed adviser before a major decision. The most valuable output is often the list of assumptions that needs checking, not the headline number.