Recurring-revenue software and managed IT, valued on forecast cash flow rather than on a revenue multiple lifted from a listed comparable.
A SaaS business valuation in Sydney normally leads with a discounted cash flow, because recurring revenue is forecastable and the growth trajectory is usually changing. Revenue and earnings multiples from comparable transactions are used to test the result, and retention, churn and net revenue retention drive the risk loading in the discount rate.
Sydney technology founders commission valuations for capital raises and secondary sales, employee share scheme reporting, co-founder separations, family law property settlements, and where the ATO requires a market value on a restructure or an early stage innovation company determination.
The other common trigger is an inbound approach. Trade buyers and private capital are active in the Sydney market, and founders regularly receive an indicative offer framed as a revenue multiple with no visibility of how it was derived. An independent valuation gives you the basis to test it.
The Income Approach leads. Recurring revenue is forecastable and the trajectory is usually changing, which is exactly the condition a discounted cash flow handles better than a single capitalised earnings figure.
A discounted cash flow forecasts cash flow year by year and discounts each year to present value, adding a terminal value. For a software business the forecast is built from cohort behaviour: new customers won, revenue retained and expanded within the existing base, and churn. That is more defensible than growing last year's revenue by a single percentage.
Where the business is mature and growth has settled, capitalisation of future maintainable earnings is the simpler and better method. Managed IT services businesses with long-dated contracts often fall into this group.
The discount rate is built up rather than assumed: a risk-free rate from long-dated Australian Government bond yields (Source: RBA, Statistical Tables F2 Capital Market Yields), an equity risk premium, a size premium, an industry risk premium, then a company-specific loading for customer concentration, churn, key person dependence and the quality of the revenue data itself.
Comparable transactions for private software businesses of similar size and growth, expressed as a multiple of annual recurring revenue or of earnings. Listed company multiples are a ceiling and a sanity check, not a method: a listed comparable is larger, liquid and diversified, and those differences are worth more than the similarity in business model.
Rarely relevant beyond a floor. Capitalised development costs on the balance sheet are not a measure of what the software is worth, and the valuation does not treat them as one.
Normalisation is the most common source of disagreement in a valuation, so it is set out in full in the report rather than buried in a schedule. For this industry the recurring adjustments are:
Tech Central, the inner Sydney innovation district spanning six square kilometres across Surry Hills, Haymarket, Ultimo, Eveleigh, Chippendale and Camperdown, supports a $42 billion economy employing almost 100,000 people across 4,300 businesses, alongside 150 research institutes and centres of excellence (Source: NSW Government, Tech Central). That concentration matters to a valuation because it shapes salary benchmarks, the availability of acquirers and the realistic cost of replacing a founder in a technical role.
Information media and telecommunications businesses grew 4.0 per cent in the national business count in 2025 to 2026, and professional, scientific and technical services grew 3.6 per cent (Source: ABS, Counts of Australian Businesses, July 2022 to June 2026, released 18 August 2026). New South Wales recorded the largest net increase in actively trading businesses of any state or territory over the same period, up 26,057 (same source).
Sydney salary levels are a valuation input, not a footnote. Founder remuneration is normalised to what it would cost to hire an equivalent engineering or commercial leader in this market, and in a small team that adjustment alone can move maintainable earnings substantially.
Still being sourced before publication: [VERIFY: Median revenue multiple for Australian private SaaS transactions in the last 12 months]; [VERIFY: Count of information media and telecommunications businesses in Greater Sydney by SA4, from the ABS Counts of Australian Businesses data cube].
The report states the purpose of the valuation, the standard of value applied, the valuation date, the information relied on and its limitations. It sets out each approach considered, the method chosen under each, the normalisation adjustments made and the reason for each one, then reconciles the results into a range and explains the weighting in words rather than by formula.
That reconciliation narrative is a large part of what makes an opinion defensible. A conclusion that cannot explain why one approach was preferred over another, or why a particular point in a multiple range was selected, is difficult to sustain when another expert reviews it. Reports are prepared consistently with APESB, APES 225 Valuation Services and are signed by a credentialed certified valuer who is prepared to explain and defend the opinion.
If another expert reviewed this report, which assumption would they challenge first, and what is your answer? A valuer who cannot answer that has not finished the work.
An Indicative valuation is the efficient way to test an inbound offer or set an internal price for a secondary sale. It is for internal decision-making and is not written for third party reliance. A Summary report suits a capital raise, an employee share scheme or a co-founder buyout. A Detailed report is the level required for family law, a shareholder dispute, or a tax position that may be reviewed.
Purpose drives the choice. The more likely it is that the opinion will be reviewed by another expert, a court, a lender or the ATO, the deeper the report needs to be.
For internal decision-making. Useful for testing an offer, setting an expectation before a negotiation, or deciding whether to go to market. It is not written for third party reliance.
Sets out the approaches applied, the normalisation adjustments made and the reasoning behind the conclusion. The usual choice for a sale, an ownership change or a finance application.
Applies and reconciles all relevant approaches in full. The level required where a court, the ATO, a lender or another expert will review the opinion.