For a business whose worth is in its machines, its fleet or its land more than its goodwill, value starts with what those assets would fetch and what is owed against them.
The asset approach values an Adelaide business at the market value of everything it owns, less everything it owes, with each balance sheet item moved from its accounting figure to today's realisable price. It is the leading method for capital-intensive or low-margin operators, holding entities and businesses being wound up, and it sets the minimum below which no other result should fall.
The valuer first values the tangible assets, then capitalises whatever the business earns above a fair return on them to arrive at goodwill. The method bridges asset-based and earnings-based reasoning and needs care, with every assumption set out, because a modest change in the assumed fair return produces a large change in goodwill.
Every asset and liability is restated from book value to market value: land and buildings, plant and vehicles, inventory, receivables, contingent liabilities and the tax that would fall due on any gain. The gap between book and market is where the work lies. A CNC machine in a Lonsdale workshop that was written off years ago can still sell for real money, while a refrigerated truck bought on finance last year may be worth less than the loan secured over it.
A going concern should never be worth less than its assets would raise, so the adjusted net asset figure is calculated on every engagement, whether or not it leads. When an earnings-based result falls below it, the report says so plainly, since that usually shows the business is not earning an adequate return on the capital it employs and a buyer would rather own the assets than the business. In a shareholder dispute before the Supreme Court of South Australia, that comparison is among the first points an opposing expert will examine.
Consider an illustrative steel fabricator in Wingfield supplying defence and infrastructure work. Its fixed asset register shows a press brake, a plasma table and a beam drilling line at a small fraction of what they would sell for, and the factory freehold, owned by the same company, has carried its purchase price for years. A specialist plant and machinery valuation replaces the book figures with market ones, the property is valued on sales of comparable industrial land nearby, and equipment loans, chattel mortgages and balloon payments are deducted in full when moving from enterprise value to equity value. If the freehold stays inside the company and the shares are sold, the valuer flags that stamp duty under the Stamp Duties Act 1923 (SA), administered by RevenueSA, needs to be considered by the accountant when structuring the deal; it is not an adjustment to the value of the assets.
A freight business running between Port Adelaide, Outer Harbor and a depot at Gepps Cross raises the same issues in a different shape: prime movers and trailers at what the used market would pay rather than at written down value, the depot lease or freehold, and the finance attached to almost every vehicle. Its contracted work is then tested under the income approach to see whether it justifies goodwill above what the fleet would realise on its own.
Capital-heavy or low-margin businesses: fabricators and component makers in Wingfield, Lonsdale and Edinburgh, food and wine processors from Regency Park to the Barossa, freight and warehousing operators around Port Adelaide, Gepps Cross and Adelaide Airport, civil contractors in the northern growth areas and Mount Barker, together with property and investment holding entities and any business being wound up.
For each of these the income approach still tests whether the earnings support a value above net assets, and the market approach is applied wherever sales evidence can be found. The report explains why the asset result held the most weight, or why another result overtook it.