Hobart Tech Business Valuations: SaaS, Software and Managed IT

Software sold from Tasmania to customers on the mainland and overseas, and managed IT providers serving small firms from Glenorchy to Kingston: valued on the cash customers will keep paying, and on what would remain if one or two people left.

A Hobart SaaS or software business is usually valued with a discounted cash flow built from customer cohorts, because recurring revenue can be projected and growth rarely settles into one steady year. The discount rate carries the risks a small Tasmanian team brings, such as reliance on a founder or one government contract, and private sale multiples test the result.

Why Hobart tech founders and IT owners get a valuation

Ownership changes in Hobart's tech sector tend to happen between people who already know each other. A founder buys out a co-founder who has moved interstate, a product company grants options under Division 83A to keep engineers who could work remotely for anyone, or a managed IT provider sells its client book to a competitor across the Derwent. Each needs a figure both sides can test, and so does a property settlement in the Hobart registry of the Federal Circuit and Family Court of Australia or a restructure the ATO may look at later.

The other trigger is an unexpected approach. Because Hobart tech companies often sell nationally from their first year, they are visible to mainland and overseas acquirers who may want the product, the contracts or simply the team. Their first offer tends to be a headline multiple, and having your own reasoned figure lets you test it before you negotiate.

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Why the forecast leads for a Tasmanian software business

The Income Approach leads. Subscription and support revenue follows patterns you can measure: how many customers stay each year, how much more the ones who stay spend, and how quickly new accounts arrive. A discounted cash flow uses those patterns directly, where a single year of earnings would freeze a business that is still changing shape.

We build the forecast cohort by cohort from your own billing data, not from a growth rate laid over last year's revenue. Each year's free cash flow is discounted to today and a terminal value is added once growth is expected to settle. When the cohort history is short, as it often is for a young Hobart product, the report says so and widens the range instead of inventing precision.

A managed service provider with settled contracts and modest growth is a different case. Capitalising future maintainable earnings suits it better, and an IT support business serving small firms in Moonah, Glenorchy and Kingston on rolling agreements usually belongs in that model rather than a cohort forecast.

The discount rate is assembled in layers: a risk-free rate from long-dated Australian Government bond yields (Source: RBA, Statistical Tables F2 Capital Market Yields), an equity risk premium, a size premium, an industry premium and a company-specific premium. In a Hobart business the last layer usually carries the weight: dependence on a founder or senior engineer, a handful of large customers, and how hard those people would be to replace.

Market cross-check

We look for private sales of software and IT businesses that resemble yours in scale, growth and retention, and convert them to multiples of recurring revenue or earnings. Listed technology multiples set an outer limit only: a Tasmanian private company is smaller, cannot be sold as easily and usually leans on fewer customers.

Asset cross-check

Useful mainly as a floor for an IT services business with equipment and receivables. For a software product, the value of the code shows up in what it earns, so development costs on the balance sheet are not added on top.

What gets normalised in a software or IT business

This is the step where two valuers of the same software company usually part ways, so every adjustment is written into the body of the report with its reason. For Hobart software and managed IT businesses the usual list is:

Hobart's tech sector and what it means for value

Hobart's software businesses rarely share a precinct. Many are remote-first, with a founder in Sandy Bay or the Hobart CBD and engineers working from home across Tasmania, the mainland and overseas, selling to customers who never visit the state. Others grew out of local demand: tools for salmon aquaculture, data work tied to the Antarctic and Southern Ocean science on Castray Esplanade and at Kingston, booking systems for tourism operators, and contracts with Tasmanian Government agencies. Each customer base brings its own contract length and concentration risk, and the valuation reads them separately.

A remote-first structure changes two inputs. Salaries are benchmarked against what it would cost to hire the same skills wherever the business recruits, which for senior engineers is usually a national market rather than a Hobart one. And because a small team may hold most of its product knowledge in two or three heads, the key-person premium is set from evidence: documentation, code ownership, and whether those people are tied to the business by equity or restraints.

For a managed IT provider, hardware and spare parts shipped across Bass Strait add lead time and freight that a buyer will expect to see in the margins. The local client base is made up of small and mid-sized firms: at 30 June 2025 there were 6,940 actively trading businesses in the City of Hobart council area, 4,258 in Clarence, 3,324 in Glenorchy and 2,929 in Kingborough (Source: ABS, Counts of Australian Businesses, July 2021 to June 2025, released 26 August 2025).

Across Tasmania the count rose by a net 850 actively trading businesses (1.9 per cent) in 2025 to 2026, to 45,094 at 30 June 2026, while nationally professional, scientific and technical services, the ABS division that includes computer system design, grew 3.6 per cent and information media and telecommunications 4.0 per cent (Source: ABS, Counts of Australian Businesses, July 2022 to June 2026, released 18 August 2026). More firms competing for the same engineers is one reason salary benchmarks are tested against current hiring rather than last year's payroll.

3.6%
growth in 2025 to 2026 in Australian professional, scientific and technical services businesses, the ABS division where computer system design is counted
Source: ABS, Counts of Australian Businesses, July 2022 to June 2026, released 18 August 2026
45,094
actively trading businesses in Tasmania at 30 June 2026, after a net increase of 850 (1.9 per cent) over the year
Source: ABS, Counts of Australian Businesses, July 2022 to June 2026, released 18 August 2026
6,940
actively trading businesses in the City of Hobart council area at 30 June 2025, much of the local client base a managed IT provider draws on
Source: ABS, Counts of Australian Businesses, July 2021 to June 2025, released 26 August 2025

Written to survive a second expert

Every report states its purpose, the standard of value, the valuation date and the information relied on, including anything we asked for and did not receive. It then walks through the approaches considered, the method chosen, each normalisation adjustment and its reason, and the reconciliation that turns those results into a range, with the weighting explained in words.

That reconciliation is the first thing an opposing expert reads. In the Supreme Court of Tasmania, expert opinion is governed by Part 19 of the Supreme Court Rules 2000 and the court's Practice Direction No 1 of 2016, which attaches the Expert Witness Code of Conduct, and a report that cannot say why the cohort forecast was preferred to a revenue multiple, or how the company-specific premium was set, will not hold up there or with an investor's adviser. Our reports follow APESB, APES 225 Valuation Services and are signed by a credentialed certified valuer who will explain the opinion under questioning.

A test for any valuer you are weighing up

Ask which assumption in the forecast you would attack first if you were on the other side, and what the value becomes if it moves. A valuer who has done the work answers straight away.

Which report a software or IT business needs

An Indicative valuation helps a founder decide whether an approach from a mainland buyer deserves a reply, or set an internal price before shares change hands between existing holders. It is for internal decision-making and is not written for third party reliance. A Summary report suits a capital raise, an employee share scheme grant or a co-founder buyout. A Detailed report is the right choice for a family law settlement, a shareholder dispute in the Supreme Court of Tasmania or a tax position the ATO may review.

Investors in a later round often ask to see the valuation behind earlier option grants, so a report written for an employee share scheme should assume it will be read by someone sceptical.

Indicative

For internal decision-making. Useful for testing an offer, setting an expectation before a negotiation, or deciding whether to go to market. It is not written for third party reliance.

Summary

Sets out the approaches applied, the normalisation adjustments made and the reasoning behind the conclusion. The usual choice for a sale, an ownership change or a finance application.

Detailed

Applies and reconciles all relevant approaches in full. The level required where a court, the ATO, a lender or another expert will review the opinion.

Compare the three report types

Questions Hobart software and IT owners ask

For most Hobart software businesses, through a discounted cash flow. We project revenue from your own billing history (new customers, expansion within existing accounts and the revenue churn removes), discount each year's cash flow to today, and add a terminal value once growth settles. The rate reflects the RBA risk-free rate plus premiums for size, industry and the risks specific to a small Tasmanian team, and private software sales act as the cross-check.
Any figure quoted without your growth, retention and customer mix behind it is a guess. We treat a revenue multiple as a test rather than the answer, and we take it from private sales of similar businesses, because multiples from listed technology companies reflect scale, liquidity and diversification a Hobart company does not have. The report shows where in the private range your business sits and why.
Twice over. Every point of churn removes revenue from every later year of the forecast, and churn that jumps around or is not tracked properly also adds to the risk premium in the discount rate. Clean monthly retention data is one of the most useful things a founder can bring to a valuation.
Not directly. Whether development was expensed or capitalised is an accounting choice, and a buyer pays for what the product earns, not for what it cost to build. We look at the cash the software generates and the ongoing spend needed to keep it competitive, and handle the capitalised amount consistently with the earnings figure in the model so nothing is counted twice.
It changes the risk, not the approach. Government and aquaculture contracts are often long and renewed reliably, which supports the forecast, but there are few of them, each is large, and renewal can hinge on a procurement round or on conditions in one industry. We weigh contract terms and renewal history against that concentration when setting the company-specific premium.
It changes some inputs, not the method. Salaries are benchmarked against what each role would cost to fill in the market the business actually recruits from, which for senior engineers is usually national. We also look at where product knowledge sits, how the team is tied to the business through equity or restraints, and whether a buyer could keep it running if one or two people left, because those answers drive the key-person premium.
Certified reports are delivered from seven business days once the information is complete. The pace is usually set by how quickly you can provide monthly recurring revenue with cohort retention, three years of financial statements, the capitalisation table and any customer contracts large enough to move the result.

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Andrew Mackson
Andrew Mackson, CFA, ABV, CBV
Managing Partner · 15+ years
Book a Free Consultation →

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