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A family handover has to satisfy the founder, the successor, the siblings, the ATO and Revenue NSW at the same time. Every one of those conversations starts with what the business is worth.
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A succession valuation establishes the market value of a Sydney business, or of a parcel of its shares or units, at the date it passes to a family member. The ATO assesses a related-party transfer at market value whether or not money changes hands, and the same figure drives equalisation between children, the price the successor can fund and any Division 152 relief.
Across Greater Sydney a large share of privately owned businesses are run by founders within sight of retirement, and handing the business to a son, daughter or long-serving family member is the exit most of them would prefer. It is also the exit that gets planned least carefully, because nobody is negotiating. There is no buyer across the table pushing back on the price, so the price often never gets set at all.
That is where the trouble starts. The founder needs to know whether the business can fund their retirement. The successor needs a business that can service whatever they are being asked to pay. The children who are not taking the business need to see that they have been treated fairly. And the ATO treats a transfer between family members as if it happened at market value, regardless of what was actually paid. All four questions depend on the same number.
Until that number exists, the family is negotiating with feelings. Once it exists, the conversation becomes practical: how much, funded how, over what period, and what the others receive instead. Sibling disputes over a family business are among the most corrosive we see, and they almost always trace back to a value that was assumed rather than established at the time.
We value businesses, shareholdings and unit holdings for family succession across Sydney, from trades and transport operators in Western Sydney to professional practices in the CBD and the Hills District. The valuer sets the market value and explains it to everyone at the table. Your accountant and lawyer design the transfer around it.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
A family transfer is a transaction in the eyes of the tax law, the duty law and any later dispute, even when it feels like a gift. The rules below are the ones that turn on value. Your tax adviser applies them; the valuation supplies the market value they are tested against.
When family members deal with each other, the tax law ignores whatever was actually paid and substitutes market value. A transfer at book value, for a nominal sum or for nothing still produces a capital gain on the market value of what changed hands, and an understated figure can be reopened years later with shortfall interest and penalties.
Division 152 can reduce the gain to nil, and the 15-year exemption is written for exactly this situation: an asset held for at least 15 years by an owner aged 55 or over who is parting with it in connection with retirement. Access depends on the $2 million turnover test or the $6 million net asset test, both measured at the time of the transfer, and the net asset test is a valuation exercise.
Where the business sits in a private company and value passes to a shareholder or their relative for less than market consideration, Division 7A can treat the shortfall as a deemed dividend. Undervalued transfers, unpaid entitlements and undocumented family loans are how succession plans trip this rule without anyone intending to.
Revenue NSW assesses duty at market value where the parties are related. Since 2016 New South Wales no longer charges duty on business goodwill and similar assets, but land, including the premises many family businesses own, remains dutiable, and acquiring a significant interest in a company or unit trust that holds NSW land can attract landholder duty. The revenue office forms its own view of value.
Superannuation sits alongside these rules. Amounts sheltered by the 15-year exemption or the retirement exemption can be contributed to super under the lifetime CGT cap, outside the ordinary contribution caps, but only if the election is lodged with the fund at or before the contribution is made. Missing that step is a procedural failure that generally cannot be repaired.
A valuation prepared at the moment of transfer records the position. One prepared well before it can still change the position: value drivers can be fixed, the Division 152 tests can be met with adjustment, the handover can be lengthened and the family can talk it through before any deadline arrives. The most useful succession valuations we prepare are the ones nobody is yet obliged to obtain.
The standard is market value: the price the business, or the parcel being transferred, would fetch between an informed buyer and an informed seller who are both willing and neither under pressure. That is deliberately an outsider's price. It is not what the successor could afford, not what the founder hoped for, and not the figure that would make the siblings comfortable, although once it exists all three of those conversations tend to get easier.
The income approach leads for an established trading business. Future maintainable earnings are capitalised at a rate that reflects the risk of those earnings continuing without the founder. That last qualification is the whole question in succession. Where customers, supplier terms, licences or technical know-how sit with the founder personally, part of the earnings will not survive the handover, and the valuation has to separate the goodwill that transfers from the goodwill that walks out the door.
The market approach tests the result against what comparable businesses have sold for, which also tells the family what a sale to an outsider would realistically produce as the alternative. The asset approach sets the floor, and in a family farm or a property-heavy business it is often the more important figure, because the land may be worth several times the business that operates on it.
These are the patterns we see when a family transfer reaches us after the event, often when the business is being sold or the estate is being contested.
Depth follows who will rely on the figure and how likely it is to be tested later. A founder working out whether retirement is affordable needs a clear internal view first. Once the value will be used to price a transfer, support a Division 152 position or settle what each child receives, it needs to be certified.
The report states the purpose, the standard and premise of value, the valuation date and the information relied on. It sets out the normalisation adjustments one by one with the reason for each, explains how founder dependency was assessed and what it did to the value, derives the capitalisation rate and any multiple from named sources, and reconciles the approaches to a range with the weighting explained in plain words. Where control, minority parcels or staged tranches change the answer, each is valued separately so the family can see the whole picture.
Related-party transfers get examined later, sometimes a decade later when the business is sold or an estate is contested in the Supreme Court of New South Wales. The report is written to be read cold by someone who was not in the room, and it is signed by a certified valuer who will explain it to your accountant, your lawyer and the family, and defend it if the ATO, Revenue NSW or another expert challenges it.
If one of my children challenges this transfer in ten years, will this report still explain why the number was right on the day? If the answer depends on anyone's memory, the valuation has not done its job.
Talk your situation through with a certified valuer before you commit to anything, at no cost.