What is your business really worth if it stays open tomorrow? That’s the million-dollar question behind ‘going-concern value’—a concept every Australian business owner, investor, and lender should understand in 2025. With the economy navigating a shifting interest rate environment and new regulatory scrutiny, going-concern value is in the spotlight like never before.
Going-Concern Value: More Than Just Numbers on a Balance Sheet
Going-concern value refers to the worth of a business assuming it will continue operating, as opposed to being liquidated. It’s the sum of the tangible and intangible factors—brand reputation, customer relationships, workforce expertise, and operational efficiencies—that make a business more valuable alive than dead.
- Example: A Melbourne café with loyal customers and a great location may fetch $900,000 as a going concern, but only $300,000 if liquidated for equipment and lease value alone.
- In 2025, Australian lenders and investors are scrutinising these intangible assets more closely, especially after a volatile 2024 marked by high-profile business collapses in hospitality and retail.
Crucially, going-concern value is shaped by:
- Ongoing revenue streams
- Proven management and staff
- Established supplier and customer contracts
- Brand equity and intellectual property
How Going-Concern Value Influences Financing and M&A in 2025
For entrepreneurs and investors, understanding going-concern value is essential when negotiating loans, planning business sales, or considering mergers and acquisitions (M&A). In 2025, several trends are putting this valuation metric front and centre:
- Bank Lending: Major banks are prioritising going-concern assessments for business loan approvals, especially for sectors impacted by technology disruption or supply chain volatility. As of January 2025, APRA guidelines require stricter documentation of business continuity and resilience.
- M&A Activity: With M&A deals rebounding after 2024’s dip, buyers are increasingly wary of overpaying for businesses that can’t prove sustainable profits. Deals now routinely hinge on detailed going-concern value assessments, not just asset valuations.
- Tax and Accounting: The ATO updated its business valuation guidance in March 2025, encouraging firms to document intangibles contributing to their going-concern value for tax planning and dispute resolution.
Case in Point: In early 2025, a regional childcare group secured a 20% premium on sale price after demonstrating robust recurring enrolments and a multi-year supply contract with a local council—factors that elevated its going-concern value well above its tangible assets.
Policy Updates and Valuation Best Practices for 2025
Australian businesses are operating in a landscape shaped by new accounting standards and lender expectations. Here’s what’s changed in 2025:
- Australian Accounting Standards Board (AASB) 2025 Update: The latest revision requires clearer disclosure of assumptions underpinning going-concern valuations in financial statements, especially for SMEs seeking external finance.
- Banking Royal Commission Legacy: Lenders are under pressure to justify risk assessments, meaning business owners must present comprehensive, evidence-based going-concern valuations to secure favourable terms.
- Valuation Methodologies: Professional valuers are placing more weight on future cash flow projections and the competitive advantages that support ongoing business, rather than relying solely on past financials or asset values.
Best practices for business owners in 2025 include:
- Documenting recurring revenue, contracts, and supplier/customer relationships
- Regularly updating business continuity and risk management plans
- Engaging independent valuers for unbiased going-concern assessments before major transactions
Conclusion: Make Going-Concern Value Work for Your Business
In 2025, going-concern value isn’t just an accounting term—it’s a real-world measure of your business’s future potential. Whether you’re seeking finance, planning a sale, or just want to understand your enterprise’s true worth, focusing on the factors that drive ongoing success will put you ahead of the pack.
