Business Valuation 101: Why It Matters and How It’s Done

Whether you’re planning to sell your business, bring on investors, or simply want to understand where you stand, knowing the true value of your business is essential. A business valuation provides a clear picture of what your business is worth today, and what could be done to grow that value in the future.

At Bizdom, we help business owners across Hawke’s Bay and throughout New Zealand make informed decisions by providing professional, practical valuation advice grounded in local market realities.

Why Business Valuation Matters

Many owners only think about valuation when they’re preparing to sell, but the truth is, understanding your business’s worth is valuable at every stage.

A professional valuation can help you:

• Plan for growth: Identify what drives your business’s value and where improvements could make the biggest impact.

• Prepare for sale or succession: Ensure you receive a fair price when it’s time to move on or hand over the reins.

• Secure funding or investment: Lenders and investors often require an independent valuation to assess risk and return.

• Support estate or tax planning: Valuations play an important role in structuring your finances for the future.

• Resolve disputes: In cases like shareholder disagreements, buyouts, or separation settlements, a fair valuation provides clarity and objectivity.

In short, a valuation gives you confidence,  whether you’re staying the course or preparing for your next move.

How Business Valuation Is Done

Business valuations aren’t one-size-fits-all. The right method depends on the size, structure, and nature of your business, as well as the purpose of the valuation.

Here are the most common approaches used in New Zealand business valuations:

1. Asset-Based Approach

This method adds up the value of your business assets (like property, equipment, and inventory) and subtracts liabilities. It’s often used for asset-heavy industries or when a business isn’t trading actively.

2. Earnings or Income-Based Approach

This approach looks at your business’s ability to generate profit or cash flow. Using measures such as EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), we apply a multiple or discount rate to estimate value based on financial performance and risk.

3. Market-Based Approach

This method compares your business to similar companies that have recently sold in the market. It’s particularly relevant for businesses in active industries with available transaction data.

4. Hybrid or Industry-Specific Methods

Certain sectors, like agriculture, construction, or professional services, may use tailored methods combining financial, asset, and market data for a more accurate picture.

Key Factors That Influence Value

Every business is different, but some common factors influence valuation across industries:

• Profitability and cash flow

• Customer concentration and contracts

• Business systems and processes

• Management strength and staff retention

• Brand reputation and goodwill

• Market conditions and economic outlook

A business in Hawke’s Bay, for example, might be affected by regional industry trends such as horticulture, tourism, or construction demand, while national economic factors, like interest rates and inflation, also play a role.

When Should You Get a Valuation?

You don’t need to wait for a major event like a sale to understand your business’s value. Regular valuations can help track your progress and identify opportunities to grow. Many of our clients across Napier, Hastings, and wider Hawke’s Bay use annual or biannual valuations as part of their long-term business strategy.

Partner With Bizdom

At Bizdom, we’re not just about numbers; we’re about insight. Our advisors combine practical experience with a deep understanding of local markets to deliver business valuations that stand up to scrutiny and support your next move.

Whether you’re planning to sell, restructure, or simply want a clearer picture of where your business stands, we can help you uncover its true value and potential.

Get in touch with the Bizdom team today to discuss a professional business valuation in Hawke’s Bay or anywhere across New Zealand.