Earthmoving Business Valuations
Independent valuations for earthmoving businesses across Australia.
Green Standard values earthmoving and excavation businesses: bulk earthworks contractors, excavator and loader operators, tipper and haulage fleets, plant hire companies and businesses that combine several of these. Two earthmoving businesses with the same profit can be worth very different amounts, and in this industry the value of the machines can matter as much as the earnings.
A business that hires machines and operators by the hour to builders and civil contractors on a steady basis is a different asset from one that tenders bulk earthworks packages, runs a fleet of tipper trucks, or hires machines dry to other operators. The questions of how hard the machines work, who operates them and what they would fetch if sold apply to all of them.
We examine the earnings and the asset base together, reconcile the two, and form a view on what a new owner could reasonably expect the business to earn and what the plant is worth.
How much is a earthmoving business worth?
An earthmoving business is worth what its maintainable earnings support, tested against what its plant would realise net of finance, because the machines often set a floor under the value. Utilisation, the split between wet hire and dry hire, and whether the owner or a hired operator runs the machines decide how much of the profit a new owner can expect to keep. The worked example below reconciles earnings and plant using illustrative figures.
Earthmoving businesses we value
What affects the value of an earthmoving business?
These are the questions we work through when we value an earthmoving business. A plant-heavy business is read through two lenses at once, what the machines earn and what they could be sold for, and much of the work is reconciling the two.
Revenue and utilisation
Wet hire and dry hire
Wet hire supplies a machine with an operator and often fuel, so it earns for labour as well as plant. Dry hire supplies the machine only, so it earns a return on capital with little labour and more asset risk. We separate the two because they carry different margins, risks and buyers.
Machine utilisation and hours
Each machine has to earn enough hours to cover finance, depreciation, maintenance and an operator. We compare billed hours with available hours by machine over several years, using hour-meter readings and job records, to see which machines pay for themselves and which stand idle.
Quoting and rates
Earthmoving is priced by the hour, by the load, by the cubic metre or as a lump sum, and ground conditions can turn a fixed price into a loss. We compare quoted and actual margin on completed jobs and look at how rock, wet weather and access are covered in quotes.
Fuel cost pass-through
Fuel is one of the largest running costs, and whether it is recovered through rates, a fuel levy or contract clauses decides who carries a price rise. We look at how the business handled past rises and how fuel is treated in the accounts. The treatment of fuel tax credits is a tax question for the business’s accountant.
Weather and seasonality
Wet weather stops earthworks and trucks cannot haul on soft sites, while plant still costs money standing. We look at monthly revenue over several years and how the business fills wet periods.
Plant and capital
Plant valuation: market value and written-down value
The written-down value in the accounts reflects depreciation for tax, not what a machine would fetch on the market. Market value depends on age, hours, brand, condition, undercarriage and attachments, and where plant is a large part of the value, an independent valuation by a specialist plant valuer may be needed as an input.
Earnings and asset values reconciled
Where earnings are weak relative to the plant, the market value of the plant net of debt often sets a floor under the value, and in some businesses it is the value. Where earnings are strong and the plant is modest, earnings drive the value. We test both and explain the reconciliation in the report.
Finance and leases
Fleets are commonly bought on chattel mortgage, hire purchase or lease, and finance owing, residual and balloon payments and lender consent to a sale all affect what a buyer receives. We build a schedule of every item with its finance and check whether any plant is owned personally or in a related entity.
Maintenance and replacement capex
Hydraulics, undercarriage, engines and tyres wear in cycles, and a fleet that looks profitable may be consuming capital the accounts do not show. We look at repair and maintenance spend per machine, deferred work and what it costs to keep the fleet at its current standard.
People and compliance
Operator availability
Skilled operators are scarce, and the best ones are what make a machine earn. We look at operator tenure, pay, competencies and tickets, whether the owner operates, and how the business would fill a gap without losing customers.
Owner role
In many earthmoving businesses the owner operates a machine, quotes, schedules and manages customer relationships. We deduct a market cost for each role the owner fills and look at who else could do it.
Heavy vehicle and site compliance
Trucks and plant are regulated, including chain of responsibility duties, fatigue management, load restraint, over-dimension permits and site safety. We look at compliance records, any notices or fines, and the insurance and incident history.
Customers and contracts
Customer mix
Builders, civil contractors, councils, mining and resource companies and farmers pay at different rates and on different terms, and each is exposed to a different cycle. We look at revenue by customer type over several years and how the business would cope if one segment slowed.
Customer concentration and repeat work
A business that earns a large share from one builder, contractor or project is exposed to that customer’s program. We measure concentration over several years and look at whether the work is repeat or tendered each time.
Payment terms and cash flow
Wages, fuel and finance are paid weekly or monthly, while progress claims and hire invoices are paid later, so growth stretches cash. We look at debtor ageing, retentions and how the business deals with slow payers.
How a buyer reads an earthmoving business
Buyers of earthmoving businesses include larger earthworks and civil contractors adding capacity, plant hire companies adding operators and customers, builders and developers securing supply of a critical trade, and operators expanding a fleet. Some buyers want the work and the people, others mainly want the machines, and the price they offer reflects which.
A buyer working from the earnings asks whether the machines are well utilised, whether the operators will stay and whether the customers will keep calling. A buyer working from the assets asks what the fleet is worth, what is owed on it and what it will cost to maintain. A sound valuation has an answer to both and shows where they differ.
Businesses with strong utilisation, mixed customers, well-maintained plant and low finance relative to asset value attract the widest interest. Older fleets, heavy finance or dependence on one contractor are priced more cautiously, and in some cases the business is worth little more than its plant.
Adjustments we often make in earthmoving businesses
Reported profit is restated to what the business earns on a commercial footing before any method is applied. Every adjustment is listed in the report.
Owner wages
Replacing drawings, or a salary set for tax reasons, with a market cost for the time the owner spends operating machines, quoting and scheduling.
Plant depreciation and deferred repairs
Replacing depreciation set for tax reasons with a charge that reflects real wear and replacement cost, and allowing for repairs that have been put off.
Related-party plant and premises
Machines owned personally or by a family trust and charged to the business at other than market rates, and a yard rented at other than market rent.
One-off projects
A single large earthworks contract, or a customer whose program has ended, that would distort maintainable revenue.
Profit or loss on plant disposals
Gains or losses on selling machines that are not part of normal trading and can lift or depress reported profit.
Fuel price movements and fuel tax credits
Unusual fuel price swings, and consistent treatment of fuel tax credits across the years, so that earnings are shown on a like-for-like basis.
Family members and private use
Wages paid above or below market rate, and private use of business vehicles and machines.
Information we typically review
You upload documents through the secure client portal after the engagement is confirmed. We send a list specific to your business; nothing needs to be gathered before the intake.
The financial pack
- Profit and loss statements, usually the last three years and the current year to date
- Balance sheets for the same periods
- Tax returns where relevant
- Payroll summary and employee information
- Vehicle, plant and equipment schedules
- Major customer information
- Recurring contracts and service agreements
- Revenue breakdown by service line
- Owner remuneration and drawings
- Unusual or non-recurring income and expenses
For a earthmoving business, also
- Plant and equipment register for every machine and truck: make, model, year, serial number, hour-meter reading, condition and location
- Utilisation report by machine: billed hours or loads against available hours for the last three years
- Finance schedule by item showing lender, balance, repayments, residual or balloon and any director or personal liability
- Any recent independent plant valuations, insurance valuations and auction or trade-in appraisals
- Repair and maintenance history by machine, including undercarriage, major component replacements and service records
- Hire rate card, with wet hire and dry hire revenue shown separately
- Revenue by customer and customer type for the last three years
- Fuel purchases by month, and any fuel levies or rise-and-fall clauses in contracts
- Operator list with licence or competency, tenure, pay and the machine each is assigned to
- Heavy vehicle compliance records, accreditation and registration details for trucks
- Work in progress, retentions and debtor ageing
What a earthmoving business valuation costs
Fixed fees, confirmed in writing before work begins. The standard fee applies to most established earthmoving businesses.
Independent Business Valuation
$1,995+ GST
For established trade and field-service businesses requiring an independent valuation.
- Review of financial information
- Normalisation of earnings
- Valuation methodology selected for the business and purpose
- Industry and business risk assessment
- Consideration of plant, vehicles and equipment
- Owner dependency assessment
- Goodwill analysis
- Valuation range and conclusion
- Professionally prepared valuation report
- Draft provided before finalisation
Accountant and Adviser Partner
$1,495+ GST
For accountants and professional advisers who refer valuation matters regularly.
- Streamlined client onboarding
- Adviser kept informed with client authority
- Independent report addressed to the client
- Secure document portal for the client
- Repeat-client workflow
- Partner pricing on every referred matter
Complex Valuations
From$2,995+ GST
For matters with more moving parts. Quoted as a fixed fee in writing before work begins.
- Multiple entities or divisions
- Significant plant and equipment
- Unusual ownership structures
- Partnership and shareholder disputes
- Complex normalisations
- Significant customer concentration
- Historical valuation dates
Fees are fixed and confirmed in writing before work begins.
Earthmoving valuations: common questions
How much is an earthmoving business worth?
An earthmoving business is worth what its maintainable earnings support, tested against what its plant would realise net of debt, because the plant often sets a floor under the value. A well-used fleet, mixed customers and capable operators support the earnings value, while older plant, high finance or dependence on one contractor reduce it. Our guide on how trade businesses are valued sets out the method.
Is the written-down value of my plant what the machines are worth?
No. Written-down value is an accounting figure shaped by depreciation for tax, and the market value of a machine can be well above or below it. Where plant is a large part of the value, an independent valuation by a specialist plant valuer may be needed as an input, and we will tell you if we think one is needed. Our guide on whether equipment adds to business value explains how plant and earnings are treated together.
What is the difference between dry hire and wet hire, and does it matter for valuation?
Yes, it matters. Wet hire supplies a machine with an operator, so earnings depend on people, while dry hire supplies the machine only, so earnings are closer to a return on the asset. We separate the two where the records allow, because they carry different margins and risks and attract different buyers.
Our plant is financed. Does that stop a valuation?
No. We list every item with the finance owing on it, and the debt is dealt with when moving from the value of the business to what is left for the owner. Your accountant and lender can advise on the tax and consent consequences of a sale. Where plant is significant, the valuation may be scoped as a complex valuation, from $2,995 + GST; the pricing page explains what that covers.
Related industries and guides
Valuing a earthmoving business? Start with a short intake.
An Independent Business Valuation is $1,995 + GST, with a draft before the report is finalised. Typical turnaround is 3 to 7 business days once all required information has been received.