Bizval Indicator Report
for March 2025
We like to think of the Bizval Indicator as a ‘barometer’ of SME valuation multiples providing a perspective of the value of Australian small-to-medium sized businesses.
Unlike listed companies, the sale prices of SME’s are not readily available. The Bizval Indicator helps monitor movements in the drivers of SME values.
The Bizval Indicator is derived from key drivers of SME values and is then reviewed in the context of a basket of general economic indicators.
Bizval Indicator
| NOW | 1 YEAR AGO | MOVEMENT |
|---|---|---|
| 302 | 349 | -13.3% |
Source: Bizval, 31 March 2025.
Bizval Indicator tumbles 13%.
An indicator of 302 was recorded for the March 2025 quarter, a sharp decrease from 328 for the quarter ending December 2024.
Year-on-year the indicator has decreased by a significant 13.3%. The predominate drivers of this fall was the declining Price Earnings (P/E) ratios of small cap listed companies. Data garnered from our own valuations also revealed a decrease in SME valuation multiples, however by a much smaller rate.
Alarmingly, the current indicator of 302 is the lowest recorded value in over three years.
During the quarter Bizval maintained a consistent number of valuations prepared, with the most common purposes being tax related restructures and family law matters.
General Economic Indicators
| INDICATOR | NOW | 1 YEAR AGO | MOVEMENT |
|---|---|---|---|
| All Ordinaries Index AU (1) | 8,053 | 8,154 | -1.24% |
| RBA Cash Rate AU (2) | 4.10% | 4.35% | -0.25% |
| GDP AU (3) | 1.30% | 1.50% | -0.20% |
| Dow Jones Industrial Average USA (4) | 42,002 | 39,807 | 5.51% |
| Inflation Rate AU (5) | 2.40% | 4.10% | -1.70% |
| Unemployment Rate AU (6) | 4.00% | 3.80% | 0.20% |
(1) Source: Australian Stock Exchange, 31 December 2024
(2) Source: Reserve Bank of Australia, 2 April 2025
(3) Source: Australian Bureau of Statistics, 31 December 2024 (seasonally adjusted, yearly)
(4) Source: New York Stock Exchange, 31 March 2025
(5) Source: Australian Bureau of Statistics, 31 December 2024 (headline, yearly)
(6) Source: Australian Bureau of Statistics, 20 March 2025
Inflation Rate
The Consumer Price Index (CPI) rose 0.2% in the December 2024 quarter and 2.4 % annually, according to the latest data from the Australian Bureau of Statistics (ABS).
Michelle Marquardt, ABS Head of Prices Statistics, said: “December quarter’s rise was the same as the 0.2% increase in the September 2024 quarter. These rises were the lowest recorded since the June 2020 quarter when the CPI fell during the COVID-19 outbreak when childcare was free.”
“Annually, the December quarter’s rise of 2.4% was down from 2.8% in the September quarter.” (Source: ABS)
RBA Cash Rate
At its meeting on 1 April 2025, the Board decided to leave the cash rate target unchanged at 4.10% and the interest rate paid on Exchange Settlement balances at 4.0%.
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy.
Nevertheless, the Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis. It is therefore cautious about the outlook.
The Board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation. (Source: RBA)
Drivers of SME Values
The Bizval Indicator is calculated using a proprietary formula. We research, monitor and evaluate the following components to arrive at the result.
ASX Small Cap P/E Ratios
Small Capitalisation companies have greater similarities to private SMEs than large cap stocks. Bizval reviews the mean and median price earnings (P/E) ratios of companies with market capitalization of between $20 million and $200 million. We adjust these figures to align them more closely with private SMEs by reducing the P/E ratios to account for differences in size, key-person dependence and ability to easily buy or sell (liquidity).
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Business Loan Interest Rates
Bizval monitors the advertised interest rates of Australian major banks for business loans. Using an average of these rates we then add a risk margin (commonly added to the base rate by banks when lending to small businesses). We also add a hypothetical margin for the SME proprietor to reflect their return on investment. This interest rate is then converted to a multiple.
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Businesses for Sale
Bizval undertakes a review of the volume of businesses listed for sale across Australia, taking into account any movements in this number.
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Bizval Multiples
We review an average of the multiples used in our business valuations and combine these with multiples from actual business sales (where available).
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In addition to the four drivers of SME values, the Bizval Indicator is evaluated in the context of six national / international General Economic Indicators.
The All Ordinaries Index (Australian Stock Exchange)
The ‘All Ords’ is the oldest index of shares in Australia, dating from 1980. It is derived from the share prices of 500 of the largest companies listed on the Australian Securities Exchange (ASX).
Reserve Bank of Australia Cash Rate
The RBA sets the target ‘cash rate’, which is the market interest rate on overnight funds. It uses this as the instrument for monetary policy, and influences the cash rate through its financial market operations.
Gross Domestic Product (Australia)
GDP is a monetary measure of the market value of all final goods and services produced over a defined period of time.
Dow Jones Industrial Average (USA)
The ‘Dow’ is a US stock market price-weighted index monitoring the share trading performance of 30 large, publicly owned American-based companies.
Inflation Rate (Australia)
The Consumer Price Index (CPI) measures the average change over time in the prices paid by Australian households for a fixed basket of goods and services.
Unemployment Rate (Australia)
The proportion of unemployed persons in the labor force is seasonally adjusted to take account of changes in demand for agricultural labor, students seeking employment after completing education, and so on.
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