How to value a business in the UK

Almost every private company sale in the UK starts with the same question: what is it actually worth? The honest answer is that value is set by what a buyer will pay, but the method behind most offers is consistent enough to plan around.

The usual starting point is adjusted profit, often described as EBITDA or adjusted net profit. Adjusted means the accounts are restated to show how the business performs for a new owner: owner salaries above market rate are added back, one-off costs are stripped out, and any personal expenditure running through the company is removed.

That adjusted figure is then multiplied. The multiple is where sector, size and risk come in. Recurring revenue, a spread of long-standing customers and a management team that runs the business day to day all push the multiple up. Heavy owner dependency, one dominant customer or volatile margins push it down.

Asset-backed businesses need a second look. Surplus property, plant or cash on the balance sheet may be valued separately from the trading business, which is why two firms with identical profits can be worth very different amounts.

There are limits to any desktop calculation. A buyer with a specific strategic reason to acquire you, such as gaining an accreditation, a geography or a customer list, may pay well above the standard range. That is precisely why a properly run process matters more than a formula.

If you want a grounded number rather than an online estimate, ask for a confidential valuation. We will explain the multiple we think applies to your business, and the specific things you could change to improve it.