The Number That Proves It Was Genuine

Why an independent valuation matters when a business changes hands within the family

When part of a business is being handed from one generation to the next, or from one family member to another, it is tempting to let the family’s own accountant put a figure on it. They already know the business. They have done the tax returns, the wages, the BAS, for years, sometimes decades. It seems like the sensible, efficient choice.

In my experience, that familiarity is exactly the problem, not the solution.

I am not suggesting anyone’s family accountant is dishonest. Quite the opposite. Most are diligent, careful, and genuinely trying to do right by the family they have served for years. But that closeness is precisely what makes it difficult for anyone, a sibling who feels short-changed, a bank assessing the deal, or simply the parties themselves years later, to be fully confident that the number was not shaped, even unconsciously, by years of knowing exactly what the family expects and hopes to hear.

This is not a legal opinion, and I am not offering one. It is a straightforward statement as a valuer and business broker who is regularly asked to look at exactly this kind of transfer. A valuation is not the whole of a transfer. It sits alongside proper legal and tax advice, not in place of it. But it is a necessary component, not an optional extra, and it is the component most families skip, usually to save time or money, right at the point in time when the ATO and State Revenue offices are looking over the shoulder of every family  and every transaction where it matters most.

Here is the plain reason why. The number is not there to settle an argument. It is there to prove, if ever asked, (Especially by our voracious Government Inspectors) that the transfer was genuine and properly valued. 

Additionally, nobody expects an argument on the day the business changes hands. Families seldom do. But circumstances change. A sibling who was comfortable with the arrangement at the time can feel differently five years later. 

Relationships shift. Businesses are reviewed. When that happens, a figure produced by someone who was, however capably, also the family’s long-standing adviser will always invite the question of whether it can really be relied upon. A figure produced independently, by someone with no other relationship to the family and no stake in the outcome, does not invite that question in the same way.

I say this as someone who works alongside accountants regularly, not against them. I am not after the firm’s clients. Your accountant knows the business and the family better than anyone, and that knowledge is genuinely valuable in getting a transfer right. What I bring is simply the independence that a compliance relationship, however good, cannot provide: a number that stands on its own, prepared by someone whose only job that day was to get it right.

If your business is heading towards a transfer between family members, whether that is succession to the next generation, a restructure between siblings, or simply formalising something that has been discussed informally for years, it is worth asking a simple question before it happens: if this arrangement were ever questioned, is there an independent number behind it, or only a familiar one?

If a family business transfer is on the horizon, get an independent valuation in place before it happens, not after someone asks for one. Call me directly on 1300 551 757.