Buying your first business? Here's how valuation actually works.
It is simpler than it looks. Small businesses in New Zealand are mostly valued the same way houses are appraised: by comparing them with similar ones that recently sold. Learn the two numbers that matter, then check them against real sales data.
See how it worksThe two numbers that decide what a small business is worth
1. SDE: the owner's real earnings
SDE (Seller's Discretionary Earnings) is the profit a working owner actually takes home once one-off and personal expenses are added back. It is the honest answer to "how much does this business make?"
2. The multiple: what the market pays for those earnings
Businesses sell for a multiple of their earnings. If similar businesses sell at around two times SDE, earnings of $150,000 suggest a value around $300,000. The multiple comes from real sales, which is where Bizstats comes in.
Worked figures are illustrative examples, not valuations.
Work out the owner's real earnings
Use the free calculator to estimate SDE from the numbers in a listing or financial statements. It is the first step of any small business valuation.
The bottom-line profit after all expenses, before tax.
You already know how this works.
Think about house prices. When a house goes on the market, its value is based on what similar houses in the area recently sold for. Every house is different, but comparable properties give us a clear starting point for value.
Valuing a house
A three-bedroom home in Ponsonby is worth what other three-bedroom homes in Ponsonby recently sold for. Real estate agents call these “comps”.
Valuing a business
A cafe in Auckland is worth what other similar cafes recently sold for. Business valuers call this a “market-based valuation”.
Bizstats collects real sale data from business brokers across New Zealand, so you can make valuation decisions grounded in real sale data.
See exactly what you get
A Bizstats report turns the sale prices and earnings multiples of comparable New Zealand businesses into an implied value range you can put next to an asking price and compare.
First-time buyer questions
SDE stands for Seller's Discretionary Earnings: the profit a working owner actually takes home once one-off and personal expenses are added back. Small businesses in New Zealand are usually priced as a multiple of SDE, which is why it is the first number to understand.
A multiple is the relationship between what a business earns and what it sold for. If similar businesses sell for around two times their SDE, and the business you are looking at has an SDE of $150,000, the market suggests a value around $300,000 for comparison.
A Bizstats report is a summary of real New Zealand business sales that match the industry, size and region you choose. It shows what comparable businesses actually sold for, so you can compare an asking price against the market rather than guessing.
Bizstats collects sale statistics from business sales across New Zealand and collates them into a single database. It is New Zealand data about New Zealand businesses, not overseas benchmarks.
Reports start from NZ$60 excluding GST. If you want to compare several industries or scenarios, volume pricing brings that down to $50 per report for 5 to 9 reports and $45 for 10 or more.
What does it cost?
Pay per report. No subscription, no minimum spend.
Pricing breakdown
Need heaps of data? Get in touch to explore bulk pricing and bespoke solutions.
When you find the right business, check the price against real sales.
Reports from NZ$60. No subscription, no expertise required.
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