How to Prepare Your Business for a Valuation in 2026

Introduction

The quality of a business valuation depends heavily on the quality of information available. A well-prepared business can save weeks of back-and-forth, reduce valuation costs, and often achieve a higher result.

Preparation is not about manipulating the outcome—it's about ensuring the valuer has the complete picture. Missing information is usually interpreted conservatively, which can lower the valuation. This guide covers what to prepare before engaging a professional valuer.

Step 1: Normalise Your Financial Statements

The most important step in valuation preparation. Normalisation adjusts your reported financials to reflect the true ongoing earning capacity of the business.

Common adjustments include:

• Owner's remuneration — if you pay yourself above or below market rates, adjust to market rate
• Discretionary expenses — personal vehicles, family travel, above-market rent to related entities
• One-off items — legal settlements, insurance payouts, redundancy costs, significant bad debts
• Non-recurring revenue — large contracts that won't repeat
• Below-market transactions — discounts to related parties, non-arm's length supplier arrangements

Have your accountant prepare a schedule of adjustments with supporting evidence before the valuer begins work. This demonstrates professionalism and saves time.

Step 2: Organise Your Documents

A methodical valuer will request a standard set of documents. Having them ready in advance signals an organised business—which is itself a positive value indicator.

Core documents:

• Last 3-5 years of financial statements and tax returns
• Management accounts for the current year-to-date
• Detailed aged receivables and payables reports
• Fixed asset register
• Business activity statements (BAS)
• Loan and finance agreements

Commercial documents:

• Material customer contracts (top 10 by revenue)
• Key supplier agreements
• Employee agreements for key staff
• Lease agreements for premises and equipment
• Franchise agreements (if applicable)
• Intellectual property registrations

Strategic documents:

• Business plan and budget
• Sales pipeline or forward order book
• Marketing and growth strategy
• Competitor analysis or market research
• Organisational chart

Step 3: Address Known Issues Before They're Discovered

Every business has warts. A good valuer will find them. The question is whether they discover them from you or through their own investigation.

Common issues to proactively address:

• Customer concentration — if one customer represents more than 20% of revenue, document retention strategies and diversification efforts
• Key person dependence — if the business relies on you or a key employee, document succession plans and cross-training
• Industry headwinds — if your sector is facing disruption, have a response plan ready
• Historical earnings volatility — prepare explanations for significant year-on-year fluctuations
• Pending litigation or disputes — disclose these early and provide your assessment of likely outcomes

Proactive disclosure builds trust with the valuer and prevents the discovery process from feeling adversarial.

Step 4: Prepare Realistic Forecasts

Most valuation methodologies require some forward-looking analysis. A well-prepared forecast demonstrates management capability and supports the valuation.

What makes a credible forecast:

• Clear, documented assumptions
• Historical data that supports the growth trajectory
• Sensitivity analysis showing best, base, and worst cases
• Capital expenditure requirements aligned to growth plans
• Working capital projections

Valuers are sceptical of hockey-stick projections. A realistic forecast with a 10-15% growth rate, supported by evidence, is more credible than an aggressive 50% projection with no substantiation.

Step 5: Clean Up Your Balance Sheet

Buyers and valuers pay close attention to the balance sheet. Key areas to address:

• Related party loans — document or repay these before the valuation
• Obsolete inventory — write it down to realisable value
• Doubtful debts — make appropriate provisions
• Inter-entity transactions — ensure these are at arm's length and properly documented
• Personal assets — remove personal items from the business balance sheet

A clean balance sheet reduces the risk adjustments a valuer might otherwise apply.

To see how the key financial inputs from your preparation process feed into an Excel valuation model, visit ExcelWiz.com.au.

Conclusion

Proper preparation can meaningfully improve the outcome of a business valuation. It reduces the valuer's time (and your cost), ensures your business is seen in the best light, and demonstrates the management capability that buyers and investors value.

At BizVal, we guide our clients through the preparation process before commencing formal valuation work. Contact us to discuss your valuation readiness.

Frequently Asked Questions

How long does preparation take?

For an organised business with good records, allow 1-2 weeks. For a business with less structured record-keeping, 3-4 weeks is more realistic.

Can I prepare too much?

No. Thorough preparation always benefits the valuation process. The only risk is over-optimistic adjustments that don't withstand scrutiny—let the valuer make the final call on normalisation.

What if I don't have 5 years of financial data?

For newer businesses, 2-3 years may be acceptable. The valuer will put more weight on the most recent period and apply appropriate risk adjustments for the shorter track record.

Should I clean up before or after engaging the valuer?

Before. Clean financials before the valuer starts work means less time spent on clarifications and adjustments, which reduces your cost and improves the quality of the final valuation.