Some Hobart businesses are worth chiefly what they own: machine tools, trailers, workboats, a freehold. For them, the valuation starts with an honest market price for each asset and every dollar borrowed against it.
Under the asset approach, a Hobart business is valued by restating every asset it owns at current market price and deducting every debt and liability. It leads where the worth sits in machinery, vessels, vehicles, property or a holding company, and it is calculated for every other business too, as the floor beneath the earnings and sales results.
Every asset and liability is restated from its book figure to market value: land and buildings, plant, vehicles and vessels, stock, debtors, contingent liabilities and the tax that would fall due on any gain. Most of the work lies in that gap between book and market. A Glenorchy workshop's CNC plasma table may sit in the books at nil yet fetch a solid price at auction, and a refrigerated trailer bought on finance last year can be worth less than the balance owing.
Goodwill is measured as the profit left over once the tangible assets have earned a fair return, capitalised at a suitable rate. The method straddles the asset and income approaches and is sensitive: nudge the assumed fair return and the goodwill figure swings sharply, so every input is written out for the reader.
A business that goes on trading ought to be worth at least what its assets would bring, so adjusted net assets are calculated on every engagement, not only where they lead. If the earnings result lands beneath them, the report says so plainly, because the capital in the business is probably under-earning and a buyer would rather have the assets. In a shareholder dispute in the Supreme Court of Tasmania, that comparison is often among the first things the other side's expert checks.
Consider an illustrative aluminium and steel fabricator in Glenorchy that makes workboat fittings and aquaculture equipment. Its register carries a press brake, a CNC plasma table and welding plant at a fraction of their resale value, and the factory freehold, owned by the same company, has not been revalued since it was bought. A specialist plant and machinery valuation replaces the book figures, the property is valued on industrial sales evidence, and equipment finance, chattel mortgages and balloon payments are deducted in full between enterprise value and equity value.
Selling the shares with the freehold still inside the company raises a separate question. Landholder duty under the Duties Act 2001 (Tas), assessed by the State Revenue Office of Tasmania, may be payable by the buyer; the valuer flags it for the accountant to deal with in the deal structure and does not deduct it from the assets.
Tasmania supplies over 90 per cent of Australia's Atlantic salmon (Source: Department of Natural Resources and Environment Tasmania), and contractors across the Huon Valley and the south of the state service the farms. For an illustrative contractor of that kind, workboats, cranes and net-cleaning gear are valued at what the second-hand market would pay, and the depot lease and the finance behind each vessel are brought to account. The service contracts are then tested on the income approach to see whether they support goodwill above what the equipment would realise.
Businesses heavy in equipment or light on margin: fabricators, boat builders and food processors in Glenorchy, Moonah and Cambridge; freight operators moving goods across Bass Strait; aquaculture service contractors in the Huon Valley; builders and civil contractors across Kingborough, Clarence and the Derwent Valley; and property or investment holding companies and businesses being wound up.
The assets set a floor, not a ceiling. Earnings are still capitalised to test for goodwill above that floor, sales of similar operators are used where any exist, and the report explains whether the asset figure held its place or was overtaken.