STRATEGIC VALUATION REVIEWS
Strategic valuation reviews for healthcare business owners and boards
A strategic valuation review is an independent assessment of what a healthcare business is worth today, what is driving that value and what would change it. Owners and boards use it to track value between formal valuations, to diagnose the drivers two to three years before an exit, to test decisions such as a principal reducing clinical days or adding a practitioner, and to prepare for a raise or a group structure. It is a planning tool, not a formal valuation report for legal, tax or family law purposes. HPNA prepares reviews for healthcare businesses across Australia.
Published
What is a strategic valuation review?
A strategic valuation review applies the analysis behind a formal valuation to a different purpose. It is prepared for the owner, the partners or the board rather than for a third party to rely on, and its subject is not only what the business is worth but what would change that number.
The review starts from maintainable earnings: the profit the business can be expected to sustain once one-off items and owner-specific arrangements are removed, a process called normalisation. Earnings are usually expressed as EBITDA (earnings before interest, tax, depreciation and amortisation). Under the capitalisation of future maintainable earnings method, the risk and growth prospects attached to those earnings are expressed as a multiple, the figure by which maintainable earnings is multiplied and the inverse of a capitalisation rate: lower risk and better prospects produce a higher multiple. Where the future will differ materially from the past, a discounted cash flow is used instead, bringing forecast cash flows back to a present value at a rate reflecting their risk. See what is maintainable earnings.
Two further approaches act as cross-checks. The net assets approach values identifiable assets less liabilities and carries more weight where earnings are marginal or the business is equipment-heavy, as in dental and veterinary practices. Market evidence means prices paid for comparable businesses, which in healthcare is rarely disclosed in enough detail to apply directly. Cross-checking is ordinary practice: for tax purposes the Australian Taxation Office recommends that a secondary or cross-check methodology support the primary one where possible.
The output is an indicative value or range at a stated valuation date, the date at which value is assessed, with the drivers, risks and scenarios behind it. Because it is prepared for planning it can be updated, and it can ask the question a formal report does not: what happens to value if the principal works three days instead of five. See independent business valuations for the formal service.
Who a strategic valuation review is for
Owners and partners planning an exit or succession
They want the current value and the drivers a buyer will price. Those differ by sector: patient files and referrers in a medical practice, location and dispensing volume in a pharmacy.
Principals weighing a change to their own role
A principal considering fewer clinical days or a phased retirement wants the effect on billings, on the cost of covering those sessions and on key-person risk. See preparing for sale.
Practices preparing to raise capital
An owner seeking investment from a colleague, a private investor or a corporate group needs an independent view of value and its assumptions, including how far the earnings rest on government funding.
Groups planning acquisitions or a roll-up
An acquiring practice wants to know what its own business is worth and what each target adds on the same basis. Registrations and approvals do not always move with the business: an NDIS registration is linked to a single ABN and is not transferable to another one, so a buyer acquiring through a different entity may need a fresh registration application. See NDIS provider valuations.
Boards and advisers
Boards of multi-owner groups, and the accountants and lawyers advising owners, track value between formal valuations and judge when one is needed. See succession planning.
When a strategic valuation review is useful
Annual or periodic value tracking
A yearly review shows whether revenue growth is producing growth in value, or whether rising practitioner dependence, a shortening lease or heavier reliance on one funder is eroding it.
Two to three years before an exit
Most value drivers take time to change. A recruited practitioner, patients attached to the practice rather than the principal, or a longer lease must show in the accounts before a buyer pays for them.
Before a decision that changes the earnings profile
Reducing clinical days, adding a practitioner, opening a second site, renegotiating a lease or changing the billing mix each move maintainable earnings and risk.
Before a partner is admitted or bought out
Shareholders and partnership agreements commonly set a mechanism for pricing an entry or an exit. A review gives the partners the same current picture in advance, so the formal valuation that follows is not the first time anyone sees a number.
After a change in funding settings
A change to a funding program can move maintainable earnings across a sector at once, as the November 2025 MBS bulk billing changes described below did for general practice. A review re-tests the baseline against the settings now in force rather than last year's.
Tracking value against a threshold
At the time of writing the Australian Taxation Office states that the maximum net asset value test, one of the tests at the first step of the small business capital gains tax concessions, requires the total net value of the CGT assets of you, entities connected with you, your affiliates and entities connected with your affiliates not to exceed $6 million just before the CGT event, and that the limit is not indexed for inflation. A growing practice can therefore approach a fixed line over time; whether any concession is available is a question for your accountant.
How HPNA approaches a strategic valuation review
In this section
Establishing the baseline
Every review starts with normalised earnings for the three most recent financial periods and the year to date, and an indicative value at the valuation date. We separate enterprise value, the value of the operations however funded, from equity value, what the owners hold after interest-bearing debt is deducted and non-operating assets added back. We also measure working capital, the funds tied up in debtors and stock less creditors, against the level the business normally needs. The funder mix drives it: a pharmacy carries substantial dispensary and retail stock, private fees taken at the point of service tie up very little, and invoices to NDIS plan managers, workers compensation insurers and other third-party funders sit in debtors until they are settled.
Value driver diagnostics
The diagnostic asks what a buyer would price. In most healthcare practices the bulk of the value sits in goodwill, the value of the business above its identifiable net assets, so the question is what that goodwill rests on. Goodwill may be personal, attached to a practitioner and leaving with them, or transferable, attached to systems, brand, location, team and the patient base, and only the transferable part survives a sale. A pharmacy's goodwill sits heavily in location, catchment and prescription volume; a solo specialist practice's may sit almost entirely in the principal, where personal goodwill and key-person risk, the risk that earnings depend on one person, are both high. In NDIS services the NDIS Quality and Safeguards Commission states that participants must not be automatically moved to a new owner on a change of ownership, so a review tests whether a participant base would transfer rather than assuming it. See practitioner dependence.
Benchmarking is qualitative: the spread of billings across practitioners, patient retention, revenue concentrated in one funder, referrer or plan manager, lease term, equipment and systems, and the compliance record. The result is where the business sits on each driver, not a market multiple, and EBITDA multiples explains why. For a raise or roll-up we also set out value on a control basis and on a minority basis, and review each practice on the same basis.
Scenario analysis
Scenarios are modelled from the baseline, one change at a time and then together:
- The principal reduces clinical days. Billings fall unless sessions are refilled, the cost of covering them changes the margin, and key-person risk falls only if patients actually transfer.
- Adding a practitioner. Recruitment cost, the ramp-up before a new book is full, the employment or contractor terms, and any payroll tax exposure. See payroll tax and practice value.
- Renegotiating a lease. A longer term with options supports transferable goodwill, a rent rise reduces earnings, and a relocation clause adds risk where patients come from the immediate catchment. See premises and lease terms.
- Changing the billing mix. For general practice the settings changed on 1 November 2025. According to the Department of Health, Disability and Ageing, MBS bulk billing incentive eligibility expanded to all Medicare-eligible patients and registration opened for the Bulk Billing Practice Incentive Program, under which participating practices receive an additional quarterly 12.5 per cent incentive payment on MBS benefits paid from eligible services, split evenly between the GP and the practice, and must bulk bill all MBS eligible services and be registered for MyMedicare, among other conditions. Whether that lifts or lowers maintainable earnings depends on the practice's current private fees, patient base and item mix, so it is modelled both ways.
- Buying or merging with another practice. What the target adds to combined earnings, what is duplicated, and what must be redone on a change of control. The NDIS Quality and Safeguards Commission states that from 1 July 2026 a buyer of a provider delivering high-risk or complex supports must start an audit no later than three months after the change of ownership where the change significantly affects the organisation or its governance.
Information required for a strategic valuation review
The request is lighter than for a formal valuation and grows with the scenarios tested.
Financial
- Financial statements and tax returns for the three most recent financial periods, plus year-to-date management accounts
- Budgets or forecasts, finance and equipment schedules, stock on hand where carried, and any prior valuations
Revenue and funding
- Revenue by practitioner, item or service type and funder (Medicare and MBS items, private fees, DVA, workers compensation, NDIS, private health insurance or aged care funding)
- Fee schedules, incentive program registrations, funding contracts, and participant, plan manager or referrer concentration
Workforce, ownership and premises
- Practitioner list with employment or contractor terms, hours, tenure and share of revenue, and each owner's hours and drawings
- Entity structure, shareholder or partnership agreements, registrations and approvals held, and the lease with options and rent reviews
Scenarios and plans
- The decisions you want tested, the exit or raise timetable, and any indicative offers received
Fees
What strategic valuation reviews cost
This service is quoted at the valuation report tier, which is a full independent valuation with a written report suitable for its stated purpose: a sale or purchase, a buy-in or buy-out, succession, an internal transaction, a tax matter or a restructure.
Valuation report
Up to $1 million
$1,500
$1 million to $3 million
$2,200
$3 million to $10 million
$4,950
Above $10 million
$9,450
Every fee above is fixed and quoted plus GST, and is agreed in writing before any work starts. Bands are set on annual revenue. A business sitting exactly on a boundary pays the lower fee. See the full fee schedule
What you receive
What you receive
The review is delivered as a written report and a discussion of the findings. Depending on scope:
- Normalised earnings for the periods reviewed and an indicative value or range at the valuation date
- Enterprise value and equity value, with debt, non-operating assets and working capital identified
- A value driver diagnostic showing where the business sits on each driver and what would move it
- Scenario analysis for each decision tested, with its effect on earnings, risk and indicative value
- For a raise or roll-up, control and minority perspectives and a consistent basis for each target
- A prioritised list of actions, with the key assumptions and limitations
Scope and limitations
What a strategic valuation review is not
A strategic valuation review is not a formal valuation report. It is prepared for the owner or the board on a scope agreed for internal planning, and is not intended to be relied on by a purchaser, a financier, the Australian Taxation Office, a court or another party to a dispute.
For tax or a restructure, the Australian Taxation Office states that it expects a valuation report to record the purpose and scope, the asset, the information and assumptions relied on, the methods chosen and why, enough detail to replicate the process, and a declaration of independence and any conflicts. A tax and restructure valuation is prepared to that standard; a strategic review is not. In family law the Federal Circuit and Family Court of Australia lists property valuers among the experts who may prepare a report pursuant to an order of the Court, and notes that a professional preparing a report for the Court on behalf of both parties may be referred to as a single expert; a family law valuation is the engagement there. Sales, partner exits, buy-outs and disputes likewise call for a formal report: see reasons for a valuation.
Scenarios rest on your assumptions; they do not predict what a buyer will pay. Price is what one buyer pays on the terms of one deal; value is an assessment on a defined basis. Indicative values depend on the information provided and on conditions at the valuation date.
FAQs
Strategic Valuation Reviews: frequently asked questions
What is the difference between a strategic valuation review and a formal valuation?
The purpose and the reliance. A formal valuation is prepared so that a third party, such as a purchaser, the Australian Taxation Office, a court or a departing partner, can rely on a concluded value at a valuation date, and the report is written to the standard that purpose demands. A strategic review is prepared for the owner or the board, gives an indicative value or range, and spends most of its effort on the drivers, scenarios and actions that change value. The analysis behind both is the same; the review is not written for reliance by anyone else and says so.
How often should a healthcare business review its value?
Annually is the most common rhythm, timed after the financial statements are finalised, with an additional update before any decision that changes the earnings profile. Owners planning an exit typically start two to three years out so that changes to practitioner dependence, workforce, lease and systems have time to appear in the accounts a buyer will read. Boards of larger groups may review more often where partner entries and exits, acquisitions or a capital raise are in prospect.
Can I use a strategic review to set the price when a partner buys in?
It can inform the discussion, but where the price will bind the parties an internal transaction valuation is typically the appropriate engagement. A review gives partners a shared, current view of value between formal valuations and shows how the business is tracking. When a partner actually enters or exits, the parties, and often their shareholders or partnership agreement, need a concluded value at a specific date, with the basis of the equity value, any minority considerations and the assumptions all set out for reliance.
Will a review tell me what my practice will sell for?
No. A review gives an indicative value based on maintainable earnings and the risks a buyer would price, and shows how that value responds to the decisions you are weighing. What a practice sells for depends on the buyers in the market at the time, the terms of the deal and the evidence the business can produce, none of which a review controls. What it does show is which actions would make the business more valuable to a buyer, and what proof a buyer will ask for. See sale and exit valuations for the formal service when a sale is in train.
Can a strategic review be upgraded to a formal valuation later?
Yes, but the formal valuation is a new engagement with its own valuation date, scope and information request. The baseline analysis, normalisation and value driver work done in the review shortens the formal engagement, and the actions taken since the review are reflected in the new figures. The Australian Taxation Office notes that difficulties are likely to arise where a valuer seeks to rely on a previous valuation that was compiled for a different purpose, so the formal report is prepared fresh for its stated purpose rather than by re-labelling the review.
Does the review benchmark my practice against industry multiples?
Not as a number. Benchmarking in a review is qualitative: we compare the practice with the characteristics buyers and financiers in its sector reward, such as the spread of billings across practitioners, patient or participant retention, funder and referrer concentration, lease term, equipment, systems and compliance, and show where the practice sits on each. Published multiples are averages of businesses that differ from yours in size, sector, dependence and risk, so applying one as a rule of thumb would give a false precision. See EBITDA multiples for healthcare businesses.
How does a review help when raising capital or negotiating with an investor?
It gives you an independent position before the investor proposes one. The review sets out value on a control basis and on a minority basis, since a minority interest cannot direct the business and may be worth less per share than a controlling stake, along with the assumptions an investor is likely to challenge, such as owner remuneration, practitioner retention and government funding exposure, and the effect of deal terms such as earn-outs or preferred returns. That lets you and your advisers test an offer against evidence rather than against a hope, and it identifies the information an investor will ask for in due diligence so that it can be assembled first.
What scenarios can be modelled?
Any decision that changes earnings, risk or structure. The most common are the principal reducing clinical days or moving into management, adding or losing a practitioner, changing employment or contractor terms, renegotiating or relocating the lease, opening a second site, changing the billing mix between private fees and bulk billing or between funders, adding a service line or a product range, and acquiring or merging with another practice. Each is modelled from the same baseline so results can be compared, and combined scenarios can be run where decisions interact.
Sources and further reading
Market valuation for tax purposes, Australian Taxation Office. Accessed 4 September 2026.
Maximum net asset value test, Australian Taxation Office. Accessed 4 September 2026.
Bulk Billing Practice Incentive Program registration now open, Australian Government Department of Health, Disability and Ageing. Accessed 4 September 2026.
Expert witnesses in family law, Federal Circuit and Family Court of Australia. Accessed 4 September 2026.
Buying or selling a registered NDIS business, NDIS Quality and Safeguards Commission. Accessed 4 September 2026.
Discuss a strategic valuation review
Tell us about the business, the decisions you are weighing and your timeframe, and we will confirm the scope and the information we need. What the review costs is set by the annual revenue of the business and listed on the fees page. Request a valuation or speak with HPNA.