Partner Buyout Valuation NZ: How the Price Is Actually Set By Bruce McGechan, CVA — Fealty Business Valuations A partner buyout valuation determines the fair price for one working owner to buy out another’s equity in a closely-held NZ business. The number isn’t usually the hard part. The choices behind the number are. In most NZ closely-held companies, the buy/sell clause in the shareholders’ agreement is silent on the things that decide the price: which standard of value, what level of value, what date. When those choices aren’t locked in, two competent valuers can reach numbers that are 50% apart.

Management Buyout Process NZ: How an MBO Actually Works By Bruce McGechan, CVA — Fealty Business Valuations A management buyout (MBO) is the existing management team buying the company, or a controlling stake in it, from the current owner. The team usually puts in some equity, the vendor leaves money in via a note, and a bank funds the rest. It’s a practical succession path that’s underused in NZ. About 50% of NZ SME owners are now over 55 (Stats NZ Business Demography Statistics, 2025), and a lot of them have capable management teams sitting right there. This article is

How Much Does a Business Valuation Cost in NZ? By Bruce McGechan, CVA — Fealty Business Valuations A professional business valuation in New Zealand typically costs between $2,200 and $15,000 + GST, depending on who does it, what type of report you need, and what you’re using it for. Independent specialist valuers generally charge fixed fees starting around $2,200. Accounting firms work on time-and-materials and rarely publish prices — expect $7,000 to $15,000+. Business brokers offer free appraisals, but those aren’t independent valuations (more on that below). The range is wide because “business valuation” means different things depending on who

How Does a Shareholder Buyout Valuation Work in New Zealand? A shareholder buyout valuation determines the fair price for one shareholder to buy out another’s equity in a shared business. It gives both sides a defensible number so the deal can proceed without damaging the relationship or ending up in court. Most buyout valuations in NZ follow the buy/sell provisions in a shareholders’ agreement. Those provisions typically specify three things the valuer needs: the standard of value (usually fair market value), the level of value (e.g. non-marketable minority or controlling interest), and the valuation date. They may also set out

How to Value a New Zealand Business Using the Market Approach This article is about using the market approach to value a small or mid-market business, it covers description of the market approach how to use it in New Zealand problems with the market approach There are three approaches to valuing a business: asset, income and market. The market approach is based on the Principle of Substitution. This is where we value a business based on the cost of acquiring an equal substitute and use market-based methods. Within the market approach there are four methods:1. Direct Market Data Method2. Guideline

Business Appraisal in New Zealand A business appraisal is a simplified business valuation, often done by business brokers rather than than professional business valuation analysts. Often it is just the market approach method that is used, not the asset or income approaches. For this reason it is sometimes called a ‘market appraisal’. The market approach uses similar business sales transactions in the ‘market’, calculates the similar business sales ratios and applies them to the subject company.  Business Appraisal Earnings Part of the market approach is to calculate a form of earnings. In the case of New Zealand small business this

Business Valuation for a Divorce in New Zealand In this article, I’ll step through the business valuation process from a divorce perspective. It may be useful to read my general article on business valuation first. Business Valuation for the Purpose of Divorce How do you value a business for the purposes of a divorce situation in New Zealand? The business valuation principles remain the same but there are some differences from other business valuation situations. The courts have said that a valuation is no different an exercise from other purposes and that, “it is essentially a practical question: and which

What is Enterprise Value in New Zealand Enterprise Value (EV) is a business’ total value, including equity and debt, but not cash and cash equivalents. It’s often used for M&A situations where the phrase ‘debt-free and cash-free’ is often used in share sale and purchase terms. Likewise, it is often used in the market approach public comparables method. The data is usually Enterprise Value (but sometimes MVIC, see below) so this is the appropriate comparator to use. In a public stockmarket listed company, the calculation is reasonably simple:EV =market capitalisation (share price times shares)plus total short and long-term debtless cash

What is the Meaning of EBPITD or SDE in NZ? EBPITD stands for Earnings Before Proprietor’s (wages), Interest, Tax, and Depreciation. EBPITDA stands for the same thing plus Amortisation. New Zealand is moving to the American phrase Seller’s Discretionary Earnings (SDE). EBPITD’s meaning depends on the source. In New Zealand a small business sales transaction database called BizStats defines EBPITD or SDE as the earnings of the business before:– proprietors income (salary, wages, director fees)– interest– taxes– depreciation How to use EBPITD or SDE? EBPITD or SDE is used in the market approach in a method variously called Private Comparables (and

So how do you value a private business in New Zealand in these covid19 recession times? It’s not simple. The process I suggest is to: work out if your business truly is a going concern forecast your earnings and balance sheet during and post-shutdown analyse the risk of those future earnings in the coming years look for recent market data consider asset values accept the uncertainty of the valuation but be clear about assumptions and consider a staggered sale of equity. Let’s go through these. Going Concern: can the business survive? This is simply about cash flow or solvency. Do